PEARL RIVER DELTA From World Factory to Global Innovator
Thomas Chan & Louise do Rosรกrio
Project Coordinator Gonçalo César de Sá
Authors Thomas Chan Louise do Rosário
Editorial Management Mariana César de Sá
Editorial Support Catarina Mesquita
Design Fernando Chan
Production Macaolink News and Information Services, Limited
Publisher International Institute of Macau
Printing Welfare Printing Company Limited, Macau
January 2017
ISBN ‑ 978‑99965‑59‑02‑0
Partners
Macao Pearl River Delta Research Association
PEARL RIVER DELTA From World Factory to Global Innovator
with support from
CONTENTS
07 09 22 49 59 69 79 89
FOREWORD
HISTORY Two millennia and the two Silk Roads
1. OVERVIEW The Pearl River Delta embraces new stage of industrial and urban advancement
2. GUANGZHOU Stronger and bigger aided by Delta Hinterland
3. SHENZHEN From village to high‑tech megapolis
4. FOSHAN City of ceramics and Kung Fu
5. DONGGUAN Battered global factory rebounds
6. HUIZHOU Coastline city of smart phones and beautiful beaches
99 109 119 129 139 141 143
7. ZHONGSHAN Tiger economy beefs up regional transport links
8. JIANGMEN Migrant city grew to be ondustrial leader
9. ZHUHAI Garden city to be greener and innovative
10. ZHAOQING From ancient times to modern Silk Road
BIOGRAPHY
SOURCES
GLOSSARY
5
FOREWORD
FOREWORD Embrace the opportunity and join the region’s next stage of growth with Macao as a partner
The Pearl River Delta (PRD) is China’s economic powerhouse. From a largely rural area in southern China, it has been transformed into a global factory in less than four decades; it is now a modern, industrialised metropolitan area with over 60 million inhabitants. Macao is part of this success story, being a gateway to foreign investors, especially those from Portuguese‑speaking countries, looking for business opportunities in the PRD. To help companies tap more into the potential of this fast ‑growing market, our association published in 2012‑2014 a series of eight books on the PRD, in the Portuguese language. The first volume covered the history, economic developments since 1978 and investment opportunities in the delta. The other seven books featured the PRD’s nine major cities – Guangzhou, Shenzhen, Foshan, Dongguan, Huizhou, Zhongshan, Jiangmen, Zhuhai and Zhaoqing. Our latest English‑language book “Pearl River Delta – From World Factory to Global Innovator” attempts to explore deeper the region’s economic future. With a detailed profile of each of the nine cities, we highlight the continuing modernisation of industries and infrastructure which the PRD is making under China’s national 13th Five‑Year Plan (2016‑2020) and the One Belt, One Road initiative. In this new era of development, Macao will integrate more closely with the PRD economically, with the completion of the Hong Kong‑Zhuhai‑Macao Bridge and with its joint development of Hengqin with Zhuhai. With its role in the PRD further enhanced, Macao will be in an even better position to help foreign companies access this important market. We hope our new book will serve as an useful information tool to those wishing to join the PRD’s next stage of remarkable growth. We wish to express our deepest thanks to the Macau Foundation and the International Institute of Macau for their support to both the Portuguese and the English projects. The books are produced by Macaolink News and Information Services Limited, a Macao‑based media company specialising in projects that promote relations between China and Portuguese ‑speaking countries. The books’ authors are Dr. Thomas Chan and Louise do Rosário. Maps used in the Overview are kindly provided by Invest Hong Kong.
Gonçalo César de Sá
President, Macao Pearl River Delta Research Association
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HISTORY
HISTORY
TWO MILLENNIA AND THE TWO SILK ROADS By Dr. Thomas Chan
Before China opened its door to foreign investors in the late 1970s, the Pearl River
Delta (PRD) region had never existed as an independent entity. In ancient times, the
delta region was much smaller than it is today. It has taken centuries for rivers to build up the sand bars in the estuary, and for local residents to convert them into paddy rice fields and later urban land for development. However, as early as the Han Dynasty
(206 BC – 220 AD), the imperial governments had extended their rule over the region
through trading outposts and later cities, the first being Guangzhou. The city was known as Nanhai and Panyu before it was named Guangzhou. It was located in the middle of the delta region, with easy access to the sea; it was later supported by the towns of Foshan and Dongguan, which specialised in the production of handicrafts and salt.
GUANGZHOU ‑ GATEWAY OF MARITIME SILK ROAD Guangzhou’s history was intertwined with that of the two Silk Roads. The first Silk
Road started in the early years of the Han Dynasty after the Chinese defeat of the Xiongnu
(nomadic Huns who originated from the steppes of Central Asia); the westward overland trade route went as far as the Roman Empire. The second was by sea. Limited by the navigational ability of sailing boats, the trading ports were first concentrated on the coast
of the present‑day Vietnam and Hainan Island. With the progress in shipping technology in the Tang Dynasty (618 ‑ 907 AD), the route was extended to Guangzhou, which became
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HISTORY
Canton Panorama, 1800s
the main trading port with Southeast Asia, South Asia and even the Middle East; it was the maritime Silk Road to the Arabian world and Europe.
At the Battle of Talas (or Battle of Artlakh) in 751 AD, the Tang imperial government
was defeated by the Arabs and the overland Silk Road route was blocked; most of China’s foreign trade with countries to the west was diverted to Guangzhou and the sea routes.
In the early Tang period, the imperial government set up special trade regulatory offices in Guangzhou, as well as in Yangzhou in Zhejiang, and Quanzhou in Fujian, to receive
foreign government delegations and merchants. The pro‑trade policies and the great prosperity of the Tang Dynasty attracted merchants from civilizations in the west to come trading in Guangzhou.
From Guangzhou to beyond the Beijiang river in northern Guangdong, the imperial
government also built in 714 AD a new road north, which crossed the Dayu Ling to Jiangxi and other parts of the nation, including the capital in Xian. It served as the main artery connecting inland China with the seaport of Guangzhou that was visited by Chinese and foreign ships. As the starting point of the maritime Silk Road, Guangzhou prospered.
Foreign quarters emerged just outside the city wall, with resident communities of Arabs,
HISTORY
Persians – including those from Siraf and followers of Zoroastrianism – Jews, and others from present‑day India, Sri Lanka and Indonesia.
The size of the foreign quarters was a good indicator of the scale of the foreign trade
conducted in Guangzhou then. In 879 AD, when the peasant armies of Huang Chao
conquered Guangzhou and burnt the city, it was reported that more than 120,000 Muslims, Christians, Jews and Zoroastrians were killed. Guangzhou was already a metropolis more than 1,000 years ago. Silk products and ceramics were carried by sea from Guangzhou to
Siraf on the northern shore of Persian Gulf, and from there to the Middle East and Europe.
FLOURISHING OVERSEAS TRADE With the collapse of the Tang Dynasty, China was divided into many kingdoms fighting
each other. This warring period obliged kingdoms along the coast to use foreign trade, to finance their defensive and offensive wars. The flourishing trade as a major source of
government revenue was not ignored by the succeeding Song imperial government; it
set up trade regulatory offices in Guangzhou and eight other coastal cities to facilitate overseas trade and collect taxes that contributed greatly to national revenue.
The 16th century was a period of great economic and trade expansion in Europe as
well as in China. In the Ming Dynasty (1368‑1644 AD), the early years were characterised
by the establishment of a tributary trading system for foreign government delegations;
this was managed by government trade and shipping regulatory offices in Guangzhou, Zhejiang, Fujian, and Vietnam. The seven voyages from 1405‑1433 AD of Admiral Zheng He to Southeast Asia and the Indian Ocean further promoted overseas trade between
China and the countries to the west. It led to the creation of many trading communities of Chinese in these countries.
The end of the expeditions of Zheng He did not stop the overseas trade from Guangzhou.
On the contrary, it soon overtook the official tributary trade, with the Chinese joining hands with the Muslims to develop further the long‑distance trade to the Middle East
and Mediterranean Europe. This prosperous trade prepared and in fact attracted the Europeans to come around the Cape of Good Hope, South Africa.
In the 16th century, only the Guangzhou office was in operation and the Fujian office
was relegated to deal only with tributary trade with Okinawa. After 1567, only Chinese
trading ships were allowed to go overseas from Fujian and trade with Japan and Okinawa; foreign ships were not allowed to enter Zhangzhou port. Guangzhou had become the only
Chinese port that could trade with foreign merchant ships and was the largest port in China, if not in Asia.
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HISTORY
PORTUGUESE ARRIVED IN MACAO China’s joining the intra‑Asia trade already developed by Arabs, Persians, Bengalis,
Javanese, Armenians and Gujuratis boosted the overall volume of trade. Then Portuguese merchants settled in Macao in 1553 and helped to develop China’s trade from a regional base to an inter‑continental base.
The founding of Manila by the Spaniards in the 1570s allowed a greater inflow of
silver from Peru and Mexico into the trading system, adding to the silver from Japan. This converged with the introduction of the Single Whip Tax system in China in 1574
and the silverisation of the Chinese economy. Silver became the international medium of exchange that integrated China and the economies in the Pacific and Indian Oceans.
Two trade triangles emerged, Malacca – Macao – Nagasaki and Manila – Macao –
Nagasaki, dominated first by the Portuguese and Spaniards, and later with the participation of the Netherlands. The centre of the two trade circles was Guangzhou, which integrated
the domestic economy of China through the trade routes across the Dayu Ling in the north and along the coastal ports in Guangdong, Fujian, Zhejiang and Shanghai. Since 1579, the Chinese government had started to hold a trade fair for foreign merchants twice a year
– the predecessor of the famous Canton Trade Fair that began in 1957. Macao was the
outer port for Guangzhou; the foreign quarters in Guangzhou continued to host foreign merchants and ships from afar.
PROSPERITY OF GUANGZHOU The great prosperity of Guangzhou’s foreign trade may be measured by the
disproportionately large taxes imposed by the central government on the city. In the 1570s, Guangzhou plus Macao had to pay 200,000 taels of silver every year, while the provinces
of Fujian and Zhejiang each delivered only 50,000 taels. The great demand for exports transformed the neighbouring areas of Guangzhou into a large industrial region for the
production and processing of silk, tea, chinaware, sugar, cotton cloth, ironware and salt. The region included Foshan, Nanhai, Shunde, Dongguan, Zengcheng, and the suburbs of Guangzhou, in particular the western part of the walled city. Just west of the new walled
city outside the old foreign quarters, there also emerged a commercial area for foreign merchants, with piers connecting the rivers to Macao, Nantou in present‑day Shenzhen,
and Hong Kong. This formed a major trade route from the estuary to the South China Sea. The PRD region thus evolved into a hinterland for Guangzhou for the production and
processing of commodities for exports. Guangzhou remained the central city dominating
HISTORY
the industrial hinterland as well as being a major domestic market of China. There were
export supplies of chinaware from Jiangxi, silk products and cotton textiles from Jiangsu
and Zhejiang, and tea from localities in Southern China. In return, there was demand for imported spices, cotton and, most importantly, silver. In 1640, half of the imports of Manila in terms of value came from Macao; the goods originated from Guangzhou.
Parallel to the expansion of Guangzhou, Foshan also prospered more than other towns
in the region. It was known as one of the four national centres of domestic trade; the other three were Suzhou in Jiangsu, Hankou in Hubei, and Beijing. Foshan also became
one of the four biggest industrial and commercial towns of China, thanks to its handicraft industries, particularly ironware. The other three were Wuhan’s Hankou, the national water transport hub, the famous chinaware city of Jingdezhen in Jiangxi, and the woodprint centre of Zhuxianzhen in Henan.
With so many important economic activities, the PRD region became one of the most
developed economic regions of the nation and an essential link in international trade networks that spanned continents around the world.
GUANGZHOU’S DECLINE AFTER THE OPIUM WAR The ban on seafaring in the early Qing Dynasty (1644‑1911 AD) did not disrupt foreign
trade in Guangzhou. The trade networks centred in Guangzhou and Macao continued, even
though other coastal ports had been closed. Meanwhile, smuggling and trading activities by the government of Zheng Cheng‑gong in Taiwan continued to conduct regional and inter‑continental trade.
The ban lasted only officially for 40 years. In 1685, foreign trade was re‑opened by
the imperial government after Taiwan was recovered. Four customs offices were set up, in Guangzhou, Ningbo in Zhejiang, Shanghai, and Fuzhou in Fujian. But, in 1757, only
Guangzhou was left to monopolise all China’s foreign trade. Guangzhou and the PRD
region were able to continue the trade and industrial expansion of the Ming Dynasty on a grander scale. For the period between 1844 and 1860, up to the Opium Wars (1839‑1842
and 1856‑1860) which broke Guangzhou’s monopoly over China’s foreign trade, the city handled 80 per cent of China’s total exports.
The Opium Wars that led to the establishment of the treaty port system in China and
Asia were a disaster for Guangzhou and Macao. Hong Kong replaced Macao as the outer port for Guangzhou and other treaty coastal cities. Another result was the diversion of foreign trade from Guangzhou to the Yangtze River delta. In addition, smuggling and the
free‑trade port of Hong Kong shifted exports and imports from Guangzhou to Hong Kong.
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HISTORY
Another rising star was Shanghai, which
became a treaty port in 1843; the British concession there was set up in 1845. By
1852, the foreign trade volume going through Shanghai
surpassed
that
of
Guangzhou,
making the former the largest trading port of China and Asia. From 1860 to 1900, the
national share of China’s foreign trade passing through Shanghai averaged over 50 per cent
for exports and over 60 per cent for imports. The national share of Guangzhou dropped to
around 25 per cent in the 1860s and continued to fall in subsequent years. Since the 1840s,
merchants and investors from Guangdong and Porcelain piece from the Guangdong Maritime Silk Road Museum, Hailing
Fujian had also been migrating to Shanghai, providing it with funds, knowledge and foreign connections.
With the setting up of Hankou as treaty port in the 1860s, even trade in the traditional
hinterland of Guangzhou – the upstream of the Yangtze River, Jiangxi and Hunan
provinces – went east, from Hankou to Shanghai. The vast inland hinterland that had been dominated by Guangzhou/Macao for 1,000 years was taken over by Shanghai and a group of treaty ports in Asia, including Hong Kong and those in Japan and Korea.
PEARL RIVER DELTA INDUSTRIALISED Despite such competition, foreign trade continued to expand in Guangzhou after 1840,
albeit at a slower pace on a lesser scale than in Shanghai. The southern city and its PRD hinterland experienced a process of modern industrialisation, with capital coming from
overseas Chinese. Because of competition from imported manufactured goods, traditional
handicraft industries suffered. For example, ironware from Foshan was squeezed out from domestic and overseas markets; the industry subsequently collapsed. The more competitive local handicraft industries of silk, textiles, tea and sugar were upgraded to mass production. Modern industries that concentrated on the primary processing of products sprung up in nearby villages in the region.
The PRD region was transformed from a world factory and emporium of sophisticated
products made in exchange for raw materials and silver from overseas, into a place of
HISTORY
export‑oriented industrial processing of raw materials. Exports shifted towards resource
‑based local products, in particular raw silk and tea, while imports were mainly machinery, industrial products and consumer goods. It was typical of an under‑developed economy
in the new global division of labour of the 19th and 20th centuries. For example, raw silk was grown in the delta’s villages for use in modern spinning factories in Shunde.
The processed raw silk they made was traded in Guangzhou, where foreign merchants dominated the export market. Some of the goods were shipped to Hong Kong and Macao for export. The PRD region evolved into an area of export‑oriented industrial processing of agricultural products.
WARS AND REVOLUTION Such industrialisation was disrupted when the region was occupied by the Japanese
military from the late 1930s until 1945. The local population was dispersed and the
economy devastated until the unification of the country in 1949. In face of economic sanctions by the USA and its allies, including Britain and its colony in Hong Kong, the
Chinese communist government responded by nationalising industries, finance and trade.
It adopted a centrally planned economy; in urban development, it shifted from a service
‑centred economy to a production‑oriented one. The government started to launch large
‑scale industrial investment in most cities, including Guangzhou.
In the 1950s and 1960s, heavy industries like iron and steel, non‑ferrous metals and coal
and coke were produced in Guangzhou. They took the form of large integrated modern factories. Many small and medium‑sized firms in the city were also merged and nationalised. The share of heavy industries rose from only 10 per cent in 1949 to 35 per cent in 1981.
The result of such Soviet ‑style industrialisation transformed Guangzhou and its
neighbouring PRD areas. The city became a modern industrial city, while neighbouring areas were relegated into zones of agricultural production. The previous regional network
of export‑oriented production with Guangzhou as the trading and financial centre was
destroyed, and the intermediary role of both Hong Kong and Macao was eliminated. For the first time since the establishment of Hong Kong as a British colony and a free trade port, the border was sealed; this prevented the free flow of people and goods between Hong Kong and the PRD region, including Guangzhou.
With the opening of the bi ‑annual Canton Trade Fairs and the export ‑promoting
efforts of the government, exports continued to grow in Guangzhou. The focus shifted
from the export of raw materials to that of manufactured goods. However, Guangzhou’s importance in China’s overall exports declined significantly. In the late 1970s and early
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HISTORY
1980s, Guangzhou’s share of national exports was a mere 1.6 per cent, while Hong Kong accounted for 23.7 per cent. The traditional trading link between the PRD region, including Guangzhou, Hong Kong and Macao, drastically weakened during the days of central economic planning.
RADICAL CHANGES AFTER 1978 China’s open‑door policy adopted in late 1978 represented a radical change in its
development strategy. This policy coincided with the start of negotiations for China to
take back Hong Kong (and Macao). Hong Kong was among the most advanced economies in Asia, a possible development model for China. To maintain the city’s prosperity after
the handover, Beijing created the Special Economic Zone (SEZ) of Shenzhen. Three more
were created with different target investors – Zhuhai for Macao, Xiamen for Taiwan, and Shantou for overseas Chinese mostly in Southeast Asia. The SEZs were not modelled after
the export‑processing zones popular among developing countries since the 1960s; in fact, an export‑processing zone was already set up earlier in Shekou in Shenzhen under the
sole management of the China Merchants Group, a Hong Kong‑based subsidiary of China’s Ministry of Transport.
The SEZs were experimental areas for market liberalisation modelled on the free port
of Hong Kong. More significantly, they were intended to be buffers and transitional economies to welcome the return of capitalist Hong Kong and Macao.
Despite such ambitions of the central government for the SEZs, only Shenzhen has been
a success. The key to this success has been its proximity to Hong Kong and the expansion of the Hong Kong economy into Shenzhen and Dongguan. The expansion has taken the form of the relocation of Hong Kong’s export‑oriented industrial firms. They took advantage of the lower costs and other policy concessions offered under the SEZ policy.
The other SEZ, Zhuhai, has not been able to replicate the success of Shenzhen, probably
because of its economic incompatibility with its neighbour Macao, whose economy is dominated by gambling, and its remote location in the PRD; it was far from the central
city of Guangzhou and, until recently, without local railway and highway networks linking it to Hong Kong, Guangzhou and beyond. So Zhuhai has lagged behind Shenzhen and Dongguan, faring better only than Zhaoqing.
Shenzhen’s production system of industrial processing was extended and copied in other
parts of the PRD. Dongguan, parts of Zhongshan, and Huizhou also embraced foreign investment in export‑oriented industrial processing. In the 2000s, Dongguan caught up with Shenzhen in terms of the scale of industrial processing. At one stage, its working
HISTORY
population reached over 10 million, equal to that of Shenzhen. Zhongshan and Foshan,
including its districts of Shunde and Nanhai, pursued import‑substitution industrialisation,
successfully creating towns that specialised in particular products. Many national brands of electrical appliances and household ware came from these PRD towns.
The PRD’s two major economic developments since 1980 – industrial processing and
import substitution – have been created from the bottom‑up, by local firms in townships in the western part of the region and by foreign‑invested ones in the eastern part. These
enterprises were dispersed in villages and towns, without any coordinated local, regional or provincial planning; they relied on incentives, like land grants, tax concessions and
the control of migrant workers, by local authorities. Outside Guangzhou and the SEZ of Shenzhen, the PRD has evolved into a sea of small villages and industrial towns and districts.
POLICY CHANGE AFTER 2000 In 2000, Guangzhou started to reassert its leadership in the PRD. In June 2000,
Guangzhou had an administrative reorganisation to absorb the cities of Panyu and Huadu, and turn them into urban districts; this greatly expanded the urban areas under the direct control of the municipal government. The move followed Guangzhou’s strategies adopted in 1998 to pursue both industrial restructuring and spatial development to enhance the city’s central role and status in the PRD.
Such urban expansion in 2000 led to ambitious infrastructural investment programmes,
first pursued by the municipal authorities and later endorsed by the provincial leadership.
In subsequent years, these projects evolved into a regional network of inter‑city railways and municipal subways to connect to the ambitious national high‑speed railways of the late 2000s.
The municipal government has also succeeded in attracting Japanese car makers
to build production bases in Guangzhou. In the course of 10 years, the three pillar
industries of Guangzhou – automobile, petrochemical, and electronic and information technology – have come to dominate the local economy with their combined
contribution to the city’s industrial value rising from 28 per cent in 2000 to 42.8 per cent in 2010. In 2004, for the first time in the history of Guangzhou, the value of
heavy industry exceeded that of light industry. Although the total industrial output
of Guangzhou still lags behind those of Shenzhen and Foshan, it has an industrial structure distinctively different to the labour‑intensive industrial processing and light industries of other PRD cities.
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HISTORY
GUANGZHOU MAKING A STRONG COMEBACK The shift to heavy industry has been matched by an aggressive move towards services
since the second half of the 2000s. In terms of the share of the tertiary sector in a city’s GDP, Guangzhou was the second highest in the country after Beijing, in 2008. This share has risen further since then for Guangzhou.
The turn to heavy industry and service industry has helped to re‑assert Guangzhou’s role
and functions as the central city in the PRD; it is also in line with a shift in national strategy from export‑led to domestic‑led growth. With Shenzhen and Dongguan both affected by sluggish growth of export markets in developed countries after 2008, Guangzhou has
been able to expand at a faster pace. The provincial capital has the credibility and the
policy support to challenge the leading roles of Hong Kong and Shenzhen in re‑shaping the development of the PRD.
As a domestic market, Guangzhou is much larger than Hong Kong. In 2011, retail sales
of Hong Kong were only 63 per cent and 94 per cent of those of Guangzhou and Shenzhen
respectively. Almost half of the retail sales of Hong Kong came from the heavy spending of millions of mainland Chinese, most from the PRD and, in particular, Guangzhou and Shenzhen. The scale of domestic consumption in Guangzhou is over 1.5 times that of Hong Kong; that of the PRD as a whole is more than four times.
In 2000, the PRD was less than two‑thirds the size of Hong Kong economically, but, 10
years later, it was almost 2.5 times larger than the city. The main reason is the relative
stagnation of Hong Kong after the Asian financial crisis of 1998, whilst the PRD economy has been little affected except towards the end of the decade.
In terms of demography, GDP and service industry development, the PRD has returned
to the pattern of the past millennium, with Guangzhou as the centre.
In this new phase of development, Hong Kong has been placed at a disadvantage.
In transport development in the past, all major routes radiated from Hong Kong and Shenzhen, resulting in urban sprawls along the main highways from the two cities. Now,
there is a regional network of highways and, more importantly, railways centred on Guangzhou, with Hong Kong relegated to the periphery.
Even in the service sector, Hong Kong is losing out to rival Shenzhen and Guangzhou.
In the port business, for example, Hong Kong has fallen from being the top container port
in the world in 2005 to third, with Shenzhen replacing Hong Kong as the world’s third in 2011 or 2012. Guangzhou has been the sixth or seventh largest container port in the world since 2008.
HISTORY
In the meantime, Macao has grown to become the gambling centre of China and even
of Asia. In recent years, the per capita GDP of Macao has surpassed that of Hong Kong. Macao’s integration with the PRD has also accelerated with the development of the neighbouring Hengqin island, which has a very large area of land available for use.
BLUEPRINT FOR 2008‑2020 2008 was an important year for the PRD, with the publication of the Outline Plan
of the PRD Reform and Development (2008‑2020). This is the first policy document to
define the development of the PRD region as a whole. In 2010, three supplementary
policy documents, on city‑countryside planning integration, industrial integration and
infrastructure development, were promulgated. Together, they constitute a complete policy framework for the delta’s development up to 2020. All these policy documents were
jointly drafted by the Guangdong provincial and the municipal Guangzhou governments.
This is why the overall strategy is Guangzhou ‑centric, in particular in infrastructure investment, which includes the regional railway network. It is a blueprint for promoting new concepts like innovation, saving of resources, environmental protection, and modern industry.
The strategy underscores the attempt of the provincial and city authorities to re‑organise
the economy, industry and social development of the region, with a greater emphasis on metropolitan integration.
The Outline Plan places the PRD as the centre of a multi‑layered circle of industry
and development that will extend eventually beyond the PRD to cover almost half of
China south of the Yangtze River. The integration involves two major stages. First is the
integration of infrastructure and the “initial” integration of the regional economy by 2012.
Second is the advanced economic integration and the even distribution of basic public services in the region. The instrument for achieving these two goals is the integration and cooperation of new sub‑regions. The nine major cities of the PRD are divided into three
sub‑regions: Guangzhou‑Foshan‑ Zhaoqing, Shenzhen‑Dongguan–Huizhou, and Zhuhai
‑Zhongshan–Jiangmen. Cities in each of the three sub‑regions have signed cooperation
agreements with the others, setting out measures for economic integration. Guangzhou has set a good example of integration by making a merger agreement with Foshan in 2009 and implementing measures thereafter.
With the Outline Plan gradually put into action, the PRD region is set to move to a new
stage of development in the coming years.
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OVERVIEW
Figure 1: Pearl River Delta
Beijing
CHINA
Pearl River Delta
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OVERVIEW
OVERVIEW
THE PEARL RIVER DELTA EMBRACES NEW STAGE OF INDUSTRIAL AND URBAN ADVANCEMENT By Dr. Thomas Chan
In terms of GDP, the US$1 trillion of the Pearl River Delta region compares very well
with many competitive national economies in the world. By size alone, it would rank as the 15th or 16th largest national economy in the world, on a par with Mexico and
larger than Indonesia, the Netherlands, Turkey and even Saudi Arabia. The region had a nominal per capita GDP of RMB107,011 (US$17,182) in 2015, placing it among the
richest nations in the world, ranked 39th. China, as a whole, only ranked 72th, according to the World Bank.
Guangzhou and Shenzhen, the two main PRD cities, attained a per capita GDP of
US$21,865 and US$22,106 respectively in 2015. Each has a population of more than 10 million, placing the two among the top mega cities in the world of advanced economies.
The PRD has a population of nearly 60 million enjoying high incomes and its current
GDP growth continues to be at a high level of over 7Â‑8 per cent. The demonstration and
growth effects of the region should therefore be strong enough to lead the nation, together with other similarly high growth regions of China, such as the Yangtze River Delta, towards the next development stage as an advanced society in the coming years, if not decades.
The economy of the PRD has slowed down in the last few years along with the national
economy. However, the region has still maintained a steadily faster growth rate than that of the nation, reaffirming the economic leading role that it has enjoyed since the beginning of economic reform three decades ago. More important, the slowdown is primarily a combination of cyclical factors and structural transformation.
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OVERVIEW
Cyclical because the PRD economy has been dependent on exports and yet its traditional
export markets of the US, EU and Japan have been suffering the lingering effects of the financial tsunami in 2008. The structural transformation is the result of the industrial
upgrading undertaken by local industries, partly in response to government industrial policy and partly forced by rising labour costs. This is an outcome of the shrinking of China’s working‑age population since 2012, and the deliberate government decision to
better share the fruits of development among the population, including industrial workers.
LARGE INVESTMENT IN NEW INDUSTRIES Because of the recent industrial upgrading through massive investments, the PRD
economy is now witnessing the simultaneous development of different industries at
different stages of development. These include labour ‑intensive industries such as
garments, shoes, and furniture,that were the leading ones in the early stage of export– oriented industrialisation in the 1990s. Then there are the traditional capital and technology intensive industries, such as automobiles, electrical appliances, metallurgy,
and petrochemical industries that started developing in the region in the 2000s. Now
there are the innovative IT industries, including telecommunications equipment, smart phones, LCD display panels, semiconductors, high speed railcars and other products that rely heavily on inputs of R & D, and which will be the leading industrial sectors in the coming decades.
The PRD region is a typical example of the current hybrid industrial structure
and technology regime of China, but with a greater bias towards exports and market development. Rarely in the world can one could find such a diversified industrial and
economic structure as that of the PRD. Its diversification is a major competitive advantage
of the region, rather than a disadvantage, as the PRD and the rest of China are facing a world market of different countries at different stages of development. A diversified export capability is able to meet the maximum demands of different markets.
Despite the weakening of the traditional export markets of the developed countries
in recent years, the PRD region has been able to maintain its exports and trade surplus momentum thanks to the growth of emergent developing economies. This is sustaining the PRD’s economic transformation. In 2015, the region’s trade surplus denominated in
renminbi was the equivalent of 22.5 per cent of its local GDP, a feat rarely achieved in
economies of the same per capita GDP level, and especially in the present era of economic uncertainty and growing trade protectionism.
OVERVIEW
Table 1: Quarterly GDP growth of the nine major cities in the PRD, 2015‑2016 2015 1Q
2015 2Q
2015 3Q
2015 4Q
2016 1Q
2016 2Q
Guangzhou
7.5%
8.1%
8.3%
8.4%
8.0%
8.0%
Shenzhen
7.8%
8.4%
8.7%
8.9%
8.4%
8.6%
Zhuhai
8.5%
9.0%
9.3%
10.0%
7.8%
7.8%
Foshan
7.2%
8.0%
8.3%
8.5%
7.8%
8.1%
Huizhou
8.5%
8.5%
8.8%
9.0%
8.2%
8.0%
Dongguan
6.7%
7.4%
7.9%
8.0%
7.8%
7.8%
Zhongshan
7.9%
8.2%
8.3%
8.4%
7.1%
7.6%
Jiangmen
7.4%
8.0%
8.3%
8.4%
7.3%
7.4%
Zhaoqing
8.2%
8.0%
8.1%
8.2%
5.9%
5.5%
National
7.0%
7.0%
6.9%
6.8%
6.7%
6.7%
Source: Guangdong Statistical Bureau
Table 2: GDP annual growth rates of the nine major cities in the PRD, 2000‑2015 City
2000
2005
2010
2011
2012
2013
2014
2015
Guangzhou
113.3
112.9
113.2
111.3
110.5
111.6
108.6
108.4
Shenzhen
115.7
115.1
112.4
110.0
110.0
110.5
108.8
108.9
Zhuhai
112.0
113.1
112.9
111.3
107.3
110.8
110.4
110.0
Foshan
112.5
119.4
114.1
111.3
108.0
109.8
108.3
108.5
Huizhou
111.3
115.9
118.0
114.7
112.7
113.8
110.0
109.0
Dongguan
119.7
119.5
110.3
108.0
106.1
109.8
107.8
108.0
Zhongshan
112.4
120.9
114.0
113.1
111.3
110.0
108.0
108.4
Jiangmen
110.2
112.6
114.5
113.0
108.1
109.8
107.8
108.4
Zhaoqing
110.6
115.7
117.1
114.7
111.0
111.5
110.0
108.2
PRD
113.7
115.7
112.2
109.9
108.1
109.3
107.8
108.6
Source: Guangdong Statistical Yearbook, 2016
27
28
OVERVIEW
Table 3: Per capita GDP of the nine major cities in the PRD (in RMB) City
2000
2005
2010
2011
2012
2013
2014
2015
Guangzhou
25,626
53,809
87,458
97,588
105,909
120,294
128,478
136,188
Shenzhen
32,800
60,801
96,184
110,520
123,451
137,632
149,495
157,985
Zhuhai
27,770
45,320
78,030
90,140
95,819
105,834
116,537
124,706
Foshan
20,231
42,066
79,902
85,650
90,792
96,317
101,617
108,299
Huizhou
13,877
21,909
38,650
45,371
51,130
57,716
63,657
66,231
Dongguan
13,679
33,287
53,193
57,913
60,907
66,440
70,605
75,616
Zhongshan
15,077
36,435
60,888
70,063
77,694
83,804
88,682
94,030
Jiangmen
12,851
19,546
35,622
41,063
42,028
44,546
46,237
49,608
Zhaoqing
7,422
11,890
28,052
33,754
36,999
41,811
45,795
48,670
20,280
40,336
69,002
77,689
84,434
93,548
100,448
107,011
PRD
Source: Guangdong Statistical Yearbook, 2016
Table 4: Export structure of Guangdong in 2015* Industries Labour‑intensive industries (three industries)
Share in total exports 11.9%
Garments and clothing accessories
6.2%
Shoes
2.5%
Furniture and parts
3.2%
IT industries (four industries)
18.0%
Digital data processing equipment and parts
6.5%
Wireless phones
7.7%
LCD
1.8%
Semiconductors
2.0%
*Exports of the PRD constitute 95 per cent of the province’s total Source: Guangdong Statistical Bureau
OVERVIEW
START OF INDUSTRIALISATION Three trends illustrate the recent transformation of the PRD economy.
First, regional investment is driving the region’s development. In the 1980s, the PRD
region started its industrialisation with export‑oriented processing initiated by foreign
investment from Hong Kong, Taiwan and elsewhere. At the time, there was not a significant
pre ‑existing foundation for industrial development. This explains the overwhelming
domination of foreign investment and industrial processing in the region, in contrast with the much more indigenous industrial development of the Yangtze River Delta. However, industrial processing in Shenzhen
and Dongguan had a spillover effect on other
Table 5: Proportion of actual
extension of the industrial value chain and the
the PRD’s fixed‑asset investment
industries and services, both in terms of the prosperity created for the local population. Such
utilised foreign direct investment in
initial success also set examples of industrial investment for the public and private sectors of China. Since the beginning of the new century,
the share and role of foreign investment have declined rapidly. Investment in the region in the last 15 years has been led instead by local
infrastructure investment, including housing
1990
22.4%
1995
43.8%
2000
36.4%
2005
17.4%
2010
10.0%
2015
8.0%
investment and indigenous industries.
Source: Guangdong Statistical Bureau
Table 6: The PRD’s trade surplus versus foreign direct investment (in US$ billion) Year
Trade surplus (a)
FDI (b)
a/b
1990
2.54
1.28
1.99
1995
8.40
7.95
1.06
2000
10.46
10.39
1.01
2005
43.56
11.33
3.84
2010
112.30
18.35
6.12
2015
242.30
25.62
9.46 Source: Guangdong Statistical Bureau
29
30
OVERVIEW
Second is that local firms are exporting to new markets in developing economies. Foreign
‑invested firms still dominate the export business of the region, but their importance has
rapidly eroded in the last 5 years. Local companies have been able to overcome cost inflation and to tap into the markets of developing countries. The latter have not been
conquered by the large multinational discount retailers, as in the case of the developed markets. The existence of over 300,000 small traders from Africa, the Middle East and
lately Iran in Guangzhou shows the lucrative business of exporting industrial products
from the region to emerging markets. The products exported range from traditional
labour‑intensive garment and textile products, to electrical and electronics goods and, more recently, smart phones.
The third trend is the region’s growing capital power. From Table 6, one can see the
region now has abundant foreign exchange from its expanding trade surpluses. In the last 15 years, foreign direct investment has lost its significance as a source of foreign exchange for financing imports. The steep rise in trade surpluses also underlies the success of import
substitution for the region’s industries as a whole. Just like the country as a whole in the last 5 years, the PRD has been a net exporter of capital, technology and management; there has been relocation of labour‑intensive industries from the region to other overseas low‑cost production destinations such as those in Southeast Asia.
In 2015, the decline of exports from Shenzhen and Dongguan (the PRD’s main export
processing areas) confirmed the shift in production location. More specifically, the export
decline started in foreign‑invested firms from 2013 onwards. It occurred on a lesser
scale but with the same speed as other cities that have export industrial processing; they include Foshan, Zhuhai and Zhongshan. It seems the trend will persist given the
continued acceleration of local labour costs and the growing pessimism regarding markets in developed countries.
OVERVIEW
Table 7: Exports by cities, 2000 – 2015, in US$100 million City
2000
2005
2010
2011
2012
2013
2014
2015
Provincial Total
919.19
2,381.71
4,531.91
5,317.93
5,740.59
6,363.64
6,460.87
6,434.68
Guangzhou
117.90
266.68
483.79
564.68
589.15
628.07
727.07
811.70
Shenzhen
345.64
1,015.22
2,041.80
2,453.99
2,713.56
3,057.02
2,843.62
2,640.40
Zhuhai
36.46
107.68
208.62
239.77
216.37
265.81
290.15
288.11
Foshan
57.36
170.80
330.38
390.91
401.50
425.23
467.17
482.05
Huizhou
44.97
106.55
202.32
231.22
292.04
333.20
363.31
347.75
Dongguan
171.42
409.29
696.03
783.26
850.53
908.61
970.67
1,036.10
Zhongshan
36.77
122.54
225.04
245.46
246.44
264.75
278.78
280.07
Jiangmen
29.85
60.25
104.09
122.52
129.70
139.99
150.87
153.72
Zhaoqing
7.40
14.16
25.97
33.08
37.81
48.26
46.05
47.66
847.77
2,273.18
4,318.02
5,064.89
5,477.09
6,070.93
6,137.68
6,087.57
PRD
Source: Guangdong Statistical Yearbook, 2016
Table 8: Basic economic indicators of the PRD, 1990‑2015 Year
Investment in Fixed Assets (RMB100 million)
Of which: Real‑ Estate Investment
Total Retail Sales (RMB 100 million)
Total Exports (US$100 million)
Total Imports (US$100 million)
424.35
222.21
196.77
12.36
1,694.60
513.31
429.29
79.47
3,204.99
847.77
743.15
103.87
3,581.35
908.29
776.32
114.96
3,996.23
1,126.08
992.57
116.17
4,497.21
1,450.56
1,262.47
137.41
5,106.86
1,824.44
1,596.44
90.16
5,878.70
2,273.18
1,837.58
113.34
6,810.19
2,887.45
2,181.97
130.86
7,919.89
3,540.85
2,560.28
151.88
9,539.76
3,872.08
2,697.61
169.21
Actual Utilised FDI (US$100 million)
1990
264.34
1995
1,515.82
2000
2,364.71
2001
2,612.88
2002
2,945.74
2003
3,749.51
2004
4,515.27
2005
5,328.37
2006
5,964.60
2007
6,909.74
2008
7,829.03
‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑
2009
9,603.55
2,583.17
10,834.73
3,417.77
2,430.46
175.08
2010
11,355.80
3,118.66
12,613.24
4,318.02
3,195.01
183.47
2011
12,366.76
4,022.87
14,575.57
5,064.89
3,678.00
195.29
2012
13,974.24
4,483.67
16,552.69
5,477.09
3,956.56
215.53
2013
16,030.78
5,362.75
18,630.61
6,070.93
4,403.38
230.62
2014
17,542.28
6,293.55
20,655.78
6,137.68
4,153.86
248.61
2015
20,048.69
7,075.57
22,651.04
6,087.57
3,664.49
256.24
Source: Guangdong Statistical Yearbook, 2016
31
32
OVERVIEW
Even with the not so favourable outlook for exports, the domestic market still looks
good with annual nominal growth of 10 per cent or above. The PRD region is still in the
process of industrial upgrading thanks to import substitution and investment prompted by the industrial policy of the state at national, provincial and city levels.
STRONG MANUFACTURING SECTOR China is still an economy with a strong manufacturing sector. As the leading manufacturing
province of China, Guangdong, and in particular the PRD, has been leading the nation in its drive for industrialisation and economic transformation since the beginning of the
economic reform. In contrast to the dominant Western economic literature that argues
that the service economy will replace the industrial economy in economic development,
and despite the rhetoric of some some Chinese economists supporting such arguments, the PRD regional economy has persisted in pushing the upgrading of local industries. There
has
certainly
been
some
relocation of industries, but mostly
within the region and not outside,
Table 9: Shares of value‑added of industry
and capital formation in local GDP in 2015
except by foreign‑invested firms seeking
low costs. A look at the local structure
Share of industry
Share of investment
Guangzhou
28.6%
35.5%
Shenzhen
38.5%
17.0%
Zhuhai
44.1%
86.8%
Foshan
58.4%
38.6%
Dongguan
45.3%
29.5%
Zhongshan
52.1%
39.3%
Huizhou
51.7%
54.1%
Jiangmen
45.7%
46.0%
Zhaoqing
47.2%
46.0%
PRD
40.9%
37.1%
Cities
of fixed‑asset investment reveals that
industry is still the priority of the various PRD city governments. For second‑tier PRD cities, the value‑added output of industrial firms accounted for over 40
per cent of local GDP in 2015. There has not been any significant sign of retreat
of local industries. Instead, there has been much industrial upgrading and adding of new industries, mostly in
advanced machinery and smart phone production. The region as a whole is
still predominantly a manufacturing area, with a dominant share of global
output. If China is still the factory of the world, the PRD is the leading area to sustain this national claim.
Source: Guangdong Statistical Yearbook, 2016
OVERVIEW
The PRD region has not been deterred by deteriorating export markets in the developed
countries or the growing competition from many industrialising developed economies.
It has persisted in investing to expand and upgrade its local industries, as reflected in its high capital formation ratio, or investment ratio. The gradual spill‑over of industries from
the traditional cores of Guangzhou, Shenzhen and Dongguan has kept other PRD cities in an extensive industrial investment drive. The periphery is gaining momentum; even the
second‑tier PRD cities of Zhuhai and Foshan were spending 44.1 per cent and 58.4 per cent respectively of their total city investment in 2015.
In Guangzhou and Shenzhen, industrial investment has also been sizeable, even though
their total overall investment figures have been dominated by the real‑estate sector. Table 10: Fixed‑asset investment of the nine major cities in the PRD, 2015 (RMB100 million) City
Provincial Total
Total
Manufacturing (share of total investment)
Wholesale and Retail Trades
30,031.20
8,783.30 (29.2%)
914.86
Guangzhou
5,405.95
644.21 (11.9%)
231.11
Shenzhen
3,298.31
513.04 (15.6%)
30.49
Zhuhai
1,305.14
219.61 (16.8%)
13.60
Foshan
3,035.52
1,154.01 (38.0%)
90.89
Huizhou
1,863.93
661.68 (35.5%)
27.71
Dongguan
1,446.52
432.91 (30.0%)
19.31
Zhongshan
1,055.41
274.53 (26.0%)
32.60
Jiangmen
1,307.87
458.32 (35.0%)
34.17
Zhaoqing
1,330.03
664.68 (50.0%)
53.66
20,048.69
5,022.98 (25.0%)
533.55
PRD
Source: Guangdong Statistical Yearbook, 2016
33
34
OVERVIEW
CHINA REJECTS DEINDUSTRALISATION The experience of developed countries in their later stage of economic development
has shown a steady process of deindustrialisation. Germany, however, has proved to be
an exception of a ‘healthy’ or ‘normal’ model of continuous economic growth founded upon a virtuous cycle of industrial and trade competiveness. The PRD seems to follow an economic trajectory similar to that of Germany in recent years, but with an even stronger
emphasis on industrial upgrading. When markets in China and overseas expand rapidly again, the upgraded and expanded industrial capacity of the PRD region is likely to
compete effectively with global regions such as Greater Tokyo, Greater Paris and Greater London.
The PRD region has had rapid industrialisation in the past 30 years, supporting the
growth of a strong middle class in the cities. One result is flourishing commercial activities on the basis of rising incomes and a very positive economic outlook of local people. The region’s consumption has been stronger than those of Beijing and Shanghai. Table 11: Economic comparison of Beijing, Shanghai, Guangzhou and Shenzhen, 2015
City
Population (million)
Per capita GDP (RMB)
Per capita retail sales (RMB)
Beijing
21.70
106,284
47,630
Shanghai
24.15
103,100
41,634
Guangzhou
13.50
134,066
58,758
Shenzhen
15.80
157,985
44,098
Source: Annual Statistical Communiques of Various Cities, 2015
GUANGZHOU AS A COMMERCIAL CENTRE As the main industrial supplier of consumer goods to the nation, the PRD region has
maintained an outstanding wholesale network. It has a wholesale business larger than
retail sales, at a ratio of 8:2. Guangzhou is the PRD’s commercial centre, with a very
OVERVIEW
high wholesale ratio of 86 per cent; retail sales account for 14 per cent. Unlike the top
cities of other emerging market economies, Guangzhou’s services industry is not detached
from the local economy catering only to local urban elites and foreigners. Guangzhou is a
regional centre that integrates most of the region’s industrial output, whereas Shenzhen serves more export markets.
The PRD economic system is comprehensive and well‑organised, with a clear and
efficient regional division of labour between the industrialising second‑tier cities and
the service economies of the first‑tier cities. Its large wholesale set‑up helps the regional
industrial economy to market local industrial output and to get immediate feedback from domestic and overseas markets.
Table 12: Wholesale and retail sales
of the nine major PRD cities, 2014‑2015 (RMB100 million) 2014 Total Sales
Wholesale Trade
Guangzhou
46,206.18
39,722.33
Shenzhen
23,367.18
Zhuhai
2015 Total Sales
Wholesale Trade
6,483.85
50,902.38
43,674.66
7,227.72
19,353.89
4,013.29
23,490.77
19,477.02
4,013.75
3,825.74
3,241.04
584.70
4,180.07
3,526.66
653.41
Foshan
7,554.67
5,802.12
1,752.54
8,749.90
6,799.18
1,950.72
Huizhou
1,649.82
784.65
865.16
1,811.82
859.64
952.18
Dongguan
4,806.69
2,980.99
1,825.70
5,331.17
3,332.04
1,999.13
Zhongshan
2,457.61
1,568.93
888.68
2,500.82
1,540.27
960.55
Jiangmen
1,718.97
914.12
804.85
1,791.50
903.09
888.41
Zhaoqing
1,091.14
579.27
511.87
1,230.51
657.31
573.20
92,678.00
74,947.35
17,730.65
99,988.94
80,769.87
19,219.07
PRD
Retail Trade
Retail Trade
Source: Guangdong Statistical Yearbook, 2016
35
36
OVERVIEW
TEN‑YEAR INDUSTRIAL POLICY In 2015, the Chinese government announced a comprehensive industrial policy,
entitled Made in China 2025. It publicly abandoned the past adherence to export‑oriented industrialisation that was the model of the PRD in the past two decades. It replaced it
with a forward‑looking plan based on Germany’s Industry 4.0. The move offered a timely direction and blueprint for China’s economic transformation. At the local level, provinces and major industrial cities have competed to formulate their own versions of long‑term industrial transformation within the framework of the national policy.
In Guangdong, the provincial initiative has readily set the development path for the PRD
region. City governments in Zhuhai and Dongguan, for example, have even promulgated
their own plans of local advanced manufacturing industries before the launching of the national and provincial initiatives.
LOCAL INITIATIVES The Made in China 2025 initiative has been well received in the PRD, as local economies
in the region have been desperately trying to find an effective way of industrial upgrading
and economic transformation. Local initiatives, such as those of Zhuhai and Dongguan, on the development of advanced manufacturing industries have been more or less in line
with the national initiative. This is probably because there has been interaction between Guangdong Province and the national planners.
In Tables 13A and 13B, one can see the close correlation between the national, provincial
and local initiatives. At the city level, the pre‑existing local industrial structures have more
detailed differentiation. These plans reflect the existing and perceived future division of labour among the respective city economies.
OVERVIEW
Table 13A: Major development areas
of the Made in China 2025 Plan – National and Guangdong
National
Guangdong
• New generation information technology industry New generation information technology industry
• Integrated circuit and key components • IT communications equipment • OS and industrial software • New flat panel displays
Advanced numerical controlled machine lathes and robots
Advanced equipment manufacturing • smart equipment manufacturing
Aero and space equipment Ocean engineering equipment and high tech ships Advanced railway transport equipment
• Ships and ocean engineering equipment • railway transport equipment • Energy saving and environmental protection equipment • commercial aircraft equipment
Energy saving and new energy vehicles
Power generation equipment
• new energy equipment • automobile manufacturing • satellite applications
Farm machinery equipment
New materials
New materials
Biomedical and high quality medical equipment
Biomedical industry
Sources: State Council, Made in China 2025 (《中国制造2025》) (19 May, 2015) and Guangdong Provincial Government, Opinions on the Implementation of Made in China 2025 (广东省人民政府关于贯彻落实《中国制造2025》的实施意见), 12 September 2015
37
38
OVERVIEW
Table 13B: Made in China 2025 initiatives of Guangzhou, Shenzhen, Foshan and Zhongshan Guangzhou
Smart equipment and robots
Shenzhen Digital network equipment
Foshan New generation information technology industry
Zhongshan
Smart design
New generation information technology
Smart products
Big data and IT services
Wearable equipment
Industrial software and OS
New display equipment
Smart manufacture equipment
Smart electrical appliances Smart household items
Integrated circuits and key components
Smart medical and health products
Internet terminal equipment Smart equipment Core foundation components and parts Energy saving and new energy vehicles
Integrated circuits
Automobile industry
Industrial robots Advanced numerical machine lathes Smart special purpose equipment
New materials and fine chemicals
New components and parts
New energy equipment
Energy (power generation and grid equipment) and environmental protection equipment
Robots
Energy saving and environmental protection equipment
Railway transport
Precision manufacturing equipment
Advanced ships and ocean engineering equipment
New materials
Aero and satellite applications
New energy vehicles
Smart services
Producer’s services Aero and space technologies Urban consumption industries, such as smart household items and fashion garments
Ocean engineering equipment Genetic engineering equipment
Sources: Guangzhou City Government, Made in Guangzhou, 2025 Strategic Plan (《广州制造2025战略规划》), 26 February 2016; Shenzhen City Government, Made in China 2025 Shenzhen Action Plan (《中国制造2025》深圳行动计划), 8 December 2015; Foshan City Government, Made in China 2025 Foshan Action Plan, (《中国制造2025佛山行动方案》), 16 June 2015; Zhongshan City Government, Zhongshan City, Smart Manufacturing 2025 Plan (2016‑2025) ( 中山市智能制造2025规划 (2016‑2025年), 26 July 2016
OVERVIEW
TOP‑DOWN PLAN The current restructuring of local economies in the PRD has been basically a government
‑led activity; private local firms, rather than foreign‑invested firms, are followers. Some of
these companies, with local and central government support, have even become industrial champions, setting the example and direction for further growth for all. Shenzhen‑based
Huawei, now the largest telecommunications equipment manufacturer in the world and a
global smart phone brand, is one most recent successful example. Midea from Foshan, Gree from Zhuhai, and TCL from Huizhou have also transformed themselves to become global
leaders in electrical appliances. They have consolidated their global dominant market position
and also become leaders in diversification, upgrading through automation, and international mergers and acquisition. Midea’s recent acquisition of the white goods department of Toshiba
is the best example of the newly achieved global competitiveness of these traditional electrical appliance firms backed by local state investment from the PRD region.
Even Huawei, the IT giant, has lately faced challenges from other local smart phone
producers within the PRD region. In Dongguan, hitherto little known local brands such
as OPPO and Vivo, have taken the top market positions in China, the largest market in the world, from Huawei, Samsung and Apple. Their unexpected success propelled them into the top 6 of global companies in terms of smart phones in the third quarter of 2016.
OPPO and Vivo do not have strong local state investment, but Huawei and ZTE, also from Shenzhen, are definitely beneficiaries of government policies and credit support. All these PRD firms have outperformed Chinese brands from outside the PRD, and global
brands such as Apple, Samsung, and LG. Another PRD success story is the Shenzhen‑based automaker BYD, famous for its electric cars and buses.
Table 14: Five smartphone vendors in PRC, shipments, market share and year‑on ‑year growth, 2016 Q3 preliminary data (units in millions) 2016Q3 Shipment Volumes
2016Q3 Market Share
1. OPPO
20.1
17.5%
2. Vivo
19.2
16.7%
3. Huawei
18.0
15.7%
4. Xiaomi
10.0
8.7%
5. Apple
8.2
7.1%
39.6 115.1
Vendor
Others Total
2015Q3 Shipment Volumes
2015Q3 Market Share
Year‑Over‑Year Growth
9.0%
106.1%
9.5
8.8%
101.1%
17.2
15.8%
5.1%
17.3
15.9%
‑42.3%
12.4
11.4%
‑34.1%
34.3%
42.6
39.1%
‑7.1%
100%
108.8
100%
5.8%
9.8
Source:Asia/Pacific Quaterly Mobile Phone Tracker, October 28, 2016
39
OVERVIEW
Figure 2: China’s top five smartphone vendors by shipment, 2015 Q3‑2016 Q3 22 OPPO 20 Vivo 18 (Million Units)
40
Huawei
16 14
Xiaomi
12
Apple
10 8 6 2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
Source：TechNews（科技新報) October 31, 2016
ADVANCED MANUFACTURING The drive for industrial upgrading by local authorities has further strengthened local
leading firms. The policies outlined in local city government action plans show their
commitment to developing new advanced, high‑tech manufacturing industries that are in
the initial stage of development. There will be policy promotion and incentives to lure new industries and start‑ups from other parts of China and from overseas. One notable trend is
that various local governments have various local governments have set up Sino‑German and other industrial estates, to attract German and other foreign firms to start these new industries locally.
While promoting modern industries, local PRD authorities have not abandoned labour
‑intensive ones. Guangzhou has included “urban consumption industries” (a new term for traditional light industries and electrical appliance industries) as a focus of industrial
upgrading. Other cities also promote “smart household goods” to cover a large range of traditional labour‑intensive light industries. Local governments and indigenous firms have
also been promoting import‑substitution industrialization continuing at the same time as their long‑standing export‑oriented industrial processing.
The result is the emergence of many industrial districts gradually fashioned after those
in the famous Third Italy. Strengthened by years of tough market competition, these
districts have developed a sustainable innovation system that combines final product
assembly with new product development and design. They also have a strong supporting machinery and equipment sector.
OVERVIEW
Local government initiatives made in response to the national Made in China 2025
strategy further speed up the development of these industrial district systems. There is now an alliance of local governments, large and small firms, and government financed
R&D organisations (mostly from universities and national research institutions). An example of such cooperation is the new focus on the development of robots to beat rising labour costs and modernise existing manufacturing.
The overall strategy of Made in China 2025 in the PRD is to create an integrative dual
structure of industrial development. On the one hand, there will be science and R&D
‑intensive high‑tech industries; on the other, there will be a smart evolution of existing labour‑intensive industries and their industrial districts.
The Guangdong government has divided the PRD region into two parts: an industrial
zone of advanced IT industries on the east side of the Pearl River, and another zone of advanced equipment manufacturing on the west side. Both will cover finished consumer
products. The engine of growth is the advanced equipment and IT industries, with a marriage of new digital network technology with classical industrialisation. This is the intelligent industrial development model of Germany.
5G MOBILE TELEPHONY AND BELT‑ROAD MISSION The Chinese government has aggressively pushed the development and commercialisation
of 5G mobile telephony. As the 5G technology regime will have a speed 1,000 times faster than 4G, which was only 10 times faster than 3G, it will constitute a disruptive technology
that will impact the the entire setting of production, consumption and even everyday life. Mainland telecommunications and internet firms in Shenzhen and Dongguan are the
global players in this new technology. With massive investment in this sector, the PRD, and the nation as a whole, is set to become the first mover in the commercialisation of 5G technologies and related business models.
The Belt and Road strategy of China introduced since late 2013 is helping the
development of the many countries along the overland and sea routes. Most of these countries have been ignored by investors from the advanced countries. But, from now on, there will be massive injection of Chinese investment. The near‑term outcome will be a
radical increase in the purchasing power of local populations, especially in countries like
Myanmar and Pakistan, which have long suffered from energy shortages. Chinese support
for energy development will create a boom in local demand for electrical appliances and other household goods. Efforts to upgrade the household and electrical appliance industries of the western side of the Pearl River Delta will equip local firms, some of which
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OVERVIEW
have already become major global players, to meet such new demand.
While strong in manufacturing, the PRD region has not neglected the development
of its services. In contrast with past strategies adopted elsewhere, the PRD emphasises
integrating services with manufacturing. In Hong Kong and Macao, services have replaced manufacturing.
There will certainly be division of labour and cooperation between the PRD’s services
centres and the two special administrative regions of Hong Kong and Macao. However, if the
Made in China 2025 local initiatives are successfully accomplished in the region, the PRD’s relationship between Hong Kong and Macao may shift in favour of the Mainland cities.
The PRD region has been pushing a greater integration of its nine major cities, with a
combination of inter‑city fast railways and metropolitan subways, mostly in Guangzhou and Shenzhen. By 2020, there will be 16 inter‑city railway lines running at 200 kilometres
per hour; Guangzhou, Shenzhen and Zhuhai are the centres for integrating the region into a one‑hour core region. By 2020, total mileage of inter‑city railways will be 650
kilometres. By end‑2016, 350 kilometres will be in operation. All the cities will soon be connected by rail within one hour of each other.
Figure 3: Greater Pearl River Delta Region intercity railway network
Qingyuan
Heyuan GuangzhouDongguan-Shenzhen Extension
GuangzhouFoshan Loop
GuangzhouDongguan-Shenzhen Intercity
Guangzhou GuangzhouFoshan Metro
Zhaoqing
Dongguan
Huizhou
Foshan
Shanwei
Yunfu Jiangmen
Guangzhou-Zhuhai Intercity
Zhongshan Zhuhai
Shenzhen Hong Kong
Hong Kong-Shenzhen Western Express Line
Macao
Legend Intercity railway completed / in operation Intercity railway under construction New projects initiated before the end of 2015 Intercity railway under planning / consideration
Source: Based on the Plan on the Development of Integrated Transportation System of Guangdong Province in the Twelfth Five‑Year Plan Period. From The Greater Pearl River Delta, 7th edition, 2014 published by Invest Hong Kong
OVERVIEW
DENSE TRANSPORT NETWORK Guangzhou, the region’s transport hub and regional service centre, is working hard
develop an extensive subway network. By end‑2015, the city had nine lines with a total
of 266 kilometres in operation; another 11 lines of a total of 298 kilometres were under
construction. In all, the subway mileage of Guangzhou will be twice that of Hong Kong. In late 2015, Guangzhou set an even more ambitious target: to build an additional 15 lines of 413.5 kilometres within the next 10 years.
With such a dense transport system, the PRD area will become one of the great
metropolitan regions in the world, with the greatest degree of connectivity on a par with
Greater Tokyo, Greater Paris and Greater London, but with faster trains and more modern facilities. The enhanced connectivity will help to integrate the many local initiatives for
industrial upgrading. Both producer and consumer services will also be greatly facilitated,
making the PRD an even more dynamic region, ready to take on the new challenges arising
from the Belt‑Road national plan. In the process, Hong Kong and Macao should join the PRD region in implementing its ambitious agenda and adjust their existing development
trajectory. If not, they will miss the many great opportunities that have opened up in the new chapter of China’s economic development.
Figure 4: Expressway development in the Greater Pearl River Delta region s ay a w lt ss De re er p v Ex l Ri r ng a R i Pe in
To WUZHOU, GUANGXI
To BEIJING
GUANGZHGOU
ZHAOQING
Guanghui Expressway
Guangshen Expressway
Guangw u H i ghway O
ing gm y an wa Gu ress p Ex
Zenguanshen Expressway Changhu Expressway
Humen Bridge
Guangzhu West Highway
DONGGUAN en gsh l an Gu oasta y C sswa re Exp
s ay sw a es elt pr D Ex ver i ng R -ri rl er ea P in
ut
FOSHAN
Ji angl uo E x pr e ssway
a Gu
zh ng
an
Exp
s res
y wa
JIANGMEN
YANGJIANG
Ji angz hong E x pr essway
ZHONGSHAN Jiangzhu Expressway
We
st e
rn
Co
as
Jingzhu Highway
SHANTOU
Shenshan Expressway
Jihe Expressway
SHENZHEN
YANTIAN
HONG KONG INTERNATIONAL AIRPORT HONG KONG
Xintai Expressway
To ZHANJIANG
Chaoguan Expressway
200 km long existing route, about 4-hour travelling time
ZHUHAI
t
H al
ig
ay hw
Hong Kong-Zhuhai-
MACAO -Macao
Proposed route, about 40 km long, about 45-minute travelling time
Bridge
Existing Road Road under Planning/ Construction
Source: Based on Highway Department of HKSAR Government, Hong Kong‑Zhuhai‑Macao Bridge (HKMB) and Related Hong Kong Projects‑Newsletter. From The Greater Pearl River Delta, 7th edition, 2014 published by Invest Hong Kong
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OVERVIEW
Figure 5: Airports in the Greater Pearl River Delta city region
Guangzhou Baiyun International Airport
Shenzhen Bao’an International Airport
Hong Kong International Airport Macao International Airport Zhuhai Airport
Major Airport Subsidiary Airport
Sources: Based on Construction Department of Guangdong Provincial Government, Development Bureau of Hong Kong SAR Government, Secretariat for Transport and Public Works of Macao SAR Government, Planning Study on the Co‑ordinated Development of the Greater Pearl River Delta Townships, 2009, p.80. From The Greater Pearl River Delta, 7th edition, 2014 published by Invest Hong Kong
Figure 6: Ports in the Greater Pearl River Delta city region
Foshan
Dongguan
Zhaoqing
Huizhou
Guangzhou Nansha
Jiangmen
Zhongshan
Shenzhen West
Huizhou Daya Bay Shenzhen Yantian
Hong Kong Macao Zhuhai
GPRD Port GPRD Inland River Terminal
Sources: Based on Construction Department of Guangdong Provincial Government, Development Bureau of Hong Kong SAR Government, Secretariat for Transport and Public Works of Macao SAR Government, Planning Study on the Co‑ordinated Development of the Greater Pearl River Delta Townships, 2009, p.80. From The Greater Pearl River Delta, 7th edition, 2014 published by Invest Hong Kong
OVERVIEW
Figure 7: Cross‑boundary transportation facilities in the Greater Pearl River Delta city region
Me igu an
Shenzhen International Airport
x eE
pre
ZHONGSHAN
ay s sw
Ji - H Gu SHENZHEN zh a n g en z Ex hou pr e s -She sw n ay
oE
Bridge
xp res ay sw
Xiangzhou Port District
nzh e hen e ng-S ess Lin g Ko pr Ho n te r n E x Wes
i”a
Railway
Hong Kong International Airport
ZHUHAI
en e n zh r L i n he e u-S s eng ho g z Pa s g an Gu Kon ng Ho
Ta l Rapid
Coasta
ay sw
G I nt u a n erc gz it y h o u Ra p id Z hu h Tra ai ns it
es pr
ge
ng Ko en or ng zh rrid Ho hen Co S rn te es W
Jiangmen -Zhongsh an Expressw ay
en B rid
Ex
Hu m
Ea
ste
rn
Co
rri
do
r
HONG KONG Hung Hom Station
e Bridg acau
hai-M
-Zhu Kong Hong
Macao International Airport
MACAO Hengqin Sanzhao Airport
Legend Airport
Boundary Control Point Expressway
Port
Railway Intercity Transit Existing Railway
Railway Staion
Existing Transit Line
Sources: Construction Department of Guangdong Provincial Government, Development Bureau of the Hong Kong SAR Government, Secretariat for Transport and Public Works of the Macao SAR Government, Planning Study on the Co‑ordinated Development of the Greater Pearl River Delta Townships, 2009, p.97. From The Greater Pearl River Delta, 7th edition, 2014 published by Invest Hong Kong
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OVERVIEW
Figure 8: Spatial structure of the Greater Pearl River Delta city region Figure 2-9: Spatial Structure of the Greater Pearl River Delta City-Region n Pa
D PR um
D PR
rc
Ci
Central Sub-region Zhaoqing
Huizhou
Guangzhou
Guangzhou / Foshan Metropolitan Area
Dongguan
Foshan
Eastern Sub-region
Shenzhen Jiangmen
Hong Kong / Shenzhen Metropolitan Area
Zhongshan
Western Sub-region
Zhuhai
Hong Kong
Macao / Zhuhai Metropolitan Area Macao
Pan-PRD and Major Domestic and International Markets Circum-PRD Outer-PRD The Bay Area
Legend Three Major Metropolitan Areas
Bay Area
Integrated Centre
Regional Development Axis
Development Tier
Specialised Centre
Sources: Based on Construction Department of Guangdong Provincial Government, Development Bureau of the Hong Kong SAR Government, Secretariat for Transport and Public Works of the Macao SAR Government, Planning Study on the Co‑ordinated Development of the Greater Pearl River Delta Townships, 2009, p.44. From The Greater Pearl River Delta, 7th edition, 2014 published by Invest Hong Kong
OVERVIEW
Figure 9: A ‘One‑hour intercity commuting circle’
Huizhou
Guangzhou
Zhaoqing
Guangzhou/Foshan Metropolitan Area
Dongguan
Foshan Zhongshan
Jiangmen
Zhuhai
Shenzhen Hong Kong/Shenzhen Metropolitan Area
Macao/Zhuhai Metropolitan Area
Macao
Hong Kong
Legend Bay Area City Node
One-hour Commuting Circle within Sub-region
One-hour Commuting Circle within Metropolitan Area
One-hour Commuting Circle within Bay Area
Sources: Based on Construction Department of Guangdong Provincial Government, Development Bureau of the Hong Kong SAR Government, Secretariat for Transport and Public Works of the Macao SAR Government, Planning Study on the Co‑ordinated Development of the Greater Pearl River Delta Townships, 2009, p.53. From The Greater Pearl River Delta, 7th edition, 2014 published by Invest Hong Kong
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49
GUANGZHOU
GUANGZHOU
STRONGER AND BIGGER AIDED BY DELTA HINTERLAND
Guangzhou, which has a recorded history of more than 2,000 years, was the centre
of China’s foreign commerce during the Tang Dynasty (618‑907 AD), when thousands
of foreigners lived in the city. Now, in the 21st century, Guangzhou is regaining its
role as a centre of global commerce, with tens of thousands of Africans, Asians and
Caucasians living there. It is the capital of Guangdong Province and the third largest
city in China. Thanks to a rapidly growing network of railways and expressways, it is becoming the centre of a huge metropolitan region around the Pearl River Delta area,
similar to Tokyo, London and Paris. The City of Rams, as this provincial capital is often
called, is set to grow bigger with the integration of two neighbouring cities, Foshan and Qingyuan.
In the national 13th Five‑Year Plan (2016‑2020), the central government aims to have
Guangzhou grow bigger and stronger. The city has been given the tasks of developing itself
as an international commercial and transport hub, of strengthening its various functions as the regional centre of the PRD, and of deepening economic cooperation with the rest of the delta, Hong Kong and Macao. More importantly, it is to be a strategic part of the new national development policy of One Belt, One Road.
In the new ambitious blueprint for Guangzhou, the newly established Free Trade Zone
in Nansha, the city’s port district, will play a crucial role. The zone is designated to be a new engine of growth, a centre of innovation, and a model area for international economic cooperation.
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GUANGZHOU
Glittering towers, Guangzhou
ANOTHER BANNER YEAR At end‑2015, Guangzhou had a resident population of 13.5 million and a land area of
7,434 square kilometres. In 2015, Guangzhou had a GDP of RMB1.81 trillion, an increase of 8.4 per cent over 2014, and a per capita GDP of RMB136,188. Added value of the
primary sector (agriculture) was RMB22.8 billion, up a year‑on‑year 2.5 per cent. The
secondary sector (manufacturing) amounted to RMB578.6 billion, up 6.8 per cent, and
the tertiary sector (services) stood at RMB1.21 trillion, up 9.5 per cent. The percentage share of the three sectors in the city’s GDP was 1.26 per cent, 31.97 per cent, and 66.77 per cent respectively.
Retail sales grew by 11 per cent to RMB793.3 billion. Per capita average disposal
income of urban residents rose to RMB46,734, up 8.8 per cent over a year earlier, while that of rural residents rose 9.4 per cent to RMB19,323.
The output value of the three pillar manufacturing sectors – automobiles, electronic
and information technology and petrochemicals – rose 8.7 per cent to RMB911.9 billion,
accounting for 48.7 per cent of large‑scale industrial output value. Of this, the output value of the auto sector rose 6 per cent to RMB377.7 billion, that of electronic and
information technology products rose 20.6 per cent to RMB278.9 billion, and that of petrochemicals rose 2.2 per cent to RMB255.3 billion. Investment in fixed assets rose 10.6
GUANGZHOU
per cent to RMB540.6 billion. Investment in real estate rose 17.7 per cent to RMB213.8 billion.
In 2015, foreign trade rose 3.5 per cent to RMB830.6 billion, with exports up 12.7 per
cent to RMB503.5 billion, and imports down 8 per cent to RMB327.2 billion. There were 1,429 new foreign investment projects signed in the year, with contracted investment
rising 4 per cent to US$8.36 billion and utilised investment rising 6.1 per cent to US$5.42 billion.
Guangzhou is also a popular tourist destination. In 2015, it had 56.58 million tourist
arrivals, a year‑on‑year increase of 6.2 per cent. Income from tourism was RMB287.2
billion, up 13.9 per cent. Major attractions in this scenic, historic city include the Sun Yat ‑sen Memorial Hall, the Bright Filial Piety Temple, the Huaisheng Mosque, the Museum
of the Western Han Dynasty Mausoleum of the Nanyue King, and Shamian Island, where
foreigners lived in the 19th century. There is also the Chimelong Tourist Resort in Panyu,
a suburb of the city, which contains a safari park, a water park, an international circus and an amusement park.
EARLY REFORMS AND PILLAR INDUSTRIES Guangzhou’s recorded history began in the Qin Dynasty (221‑207 BC). During the
Tang Dynasty (618‑907 AD), Guangzhou was the centre of the Maritime Silk Road, the sea equivalent of the land routes across Central Asia that took Chinese goods to the Middle East and Europe. Chinese and foreign ships transported these products
to Southeast and South Asia, Mesopotamia, the Middle East, the Arabian Peninsula, Ethiopia and Somalia.
By the mid‑18th century, Guangzhou had again become one of the great trading ports
of the world. The imperial government allocated an area of the city called the ‘Thirteen
Factories’ where foreign companies, mainly from Europe, were allowed to establish warehouses and offices. It was the only place in China where foreigners were allowed to live.
During the first 20 years of economic reform, Guangzhou grew strongly but more slowly
than other cities in the PRD region mainly because it offered more favourable land, labour
and tax policies to outside investors. But, since 2000, it has been regaining its leadership position, moving aggressively into higher value‑added industries. Three pillar industries
– automobiles, petrochemicals, and electronic and information technology – have come to dominate the local economy, their combined contribution to the city’s industrial value rose from 28 per cent in 2000 to 48.7 per cent in 2015.
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GUANGZHOU
Guangzhou is a latecomer in the automobile industry, but it has attracted global car
makers to invest. The Guangzhou Automobile Group, owned by the city government, has established joint ventures with several major foreign companies, including Honda, Toyota, Mitsubishi, Hino and Fiat Chrysler. The group produced nearly 1.3 million vehicles
in 2015, compared to just 740,000 in 2011. In the sector of electronic and information technology, the main foreign investors include Panasonic, Sony, Ericsson and Haier.
Guangzhou’s petrochemical industry is focused on oil refining, ethylene, synthetic
materials, coatings, fine chemicals and rubber processing. Most of its petrochemical enterprises are located in the Huangpu Petrochemical Deep Processing Base, the New
Materials and Fine Chemicals Industrial Base, and the Nansha Coastal Petrochemical
Industrial Base. Foreign investors in the sector include Procter & Gamble, Amway, Colgate, Exxon Mobil, Dow Chemical, DuPont, BP, Shell, BASF, Bayer, Total, Lonza, ENEOS and LG Chemicals.
Guangzhou is the delta’s regional service hub, providing services such as wholesale and
retail services, logistics, finance and marketing. In 2015, the service sector accounted for 66.77 per cent of the city’s GDP.
Guangzhou is building several scientific parks to promote innovation and creativity.
These include the Guangzhou New High‑tech Zone, the Sino‑Singapore Knowledge City,
Pazhou Internet Innovation Zone and Guangzhou Scientific Innovation Corridor. The
government is encouraging companies to attract foreign talent, by offering preferential policies in housing, income taxes, medical care and education.
At end‑2015, the city had registered 66 state‑level engineering technology centres, state
key labs and technology innovation platforms. It was home to 119 incubators of local companies, with a floor space of more than 6.5 million square metres, nearly four times as much space as in 2010. The Tianhe II super‑computer in the Supercomputing Centre
at the Sun Yat‑sen University is the fastest super‑computer in the world, and has provided services to more than 660 companies in different sectors.
BUILDING THE FUTURE Guangzhou has an important role to play in the One Belt, One Road national strategy.
Historically, Guangzhou always had a major place in China’s foreign trade since the Nan
Yue Dynasty (204 to 111 B.C.) During the Ming and Qing dynasties, it was for long periods the only port in the country allowed to do foreign trade, and it was one of the starting points of China’s Maritime Silk Road.
Guangdong today already has extensive commercial cooperation with over one hundred
GUANGZHOU
countries along the new overland and maritime Silk Roads. The central government
wants the city to leverage more of its long‑standing advantages in commerce, culture, geographical location, and historical connections with the outside world to promote the Belt Road strategy.
Guangzhou will be using its Nansha Pilot Free Trade Zone as a platform for broader ties
with Belt Road countries. In 2014, the State Council designated Nansha – together with
Qianhai in Shenzhen and Hengqin in Zhuhai – as one of Guangdong’s three Pilot Free Trade Zones. It gave them tax and policy privileges not available to other areas in the mainland.
The Nansha zone covers an area of 60 square kilometres, including the 7.06‑square
‑kilometre Nansha Bonded Port Area, and is divided into 7 functional districts based on activities such as port facilities, manufacturing, and logistics. Nansha has excellent port
facilities and is close to Hong Kong and Macao. It will develop transport and logistics, specialty finance, international trade, high‑end manufacturing, and specialised services.
Dozens of the world’s largest 500 companies have invested in Nansha. Over the next 10 years, Nansha will become one of Guangzhou’s engines of growth, thanks to favourable policies awarded to it as a free trade zone.
STRATEGIC TRANSPORT HUB In its many roles in the national Belt Road plan, Guangzhou is also positioned to be a
strategic transport hub. The official blueprint of One Belt, One Road mentions only two
airports, those of Shanghai and Guangzhou, underscoring their importance. Guangzhou’s
Baiyun (White Cloud) Airport ranks 11th in the world in terms of passenger throughput and 19th in terms of cargo. It has 136 international and domestic routes, and each day more than 1,000 flights leave for over 200 international destinations.
The second terminal of the airport is due to start operating in early 2018. The ancillary
facilities for a third runway have been finished and the airport has started feasibility studies for a fourth and fifth runway. By 2020, the airport is expected to handle more than 80 million passengers annually, up from 55.21 million in 2015, and over 2.5 million
tonnes of cargo. New expressways are under construction between the airport and major cities in the PRD region to make access easier.
Development of Guangzhou’s seaports is another priority. In 2016, it will open 8 to 10
new international routes, including several to the Americas. In 2015, the port handled
520 million tonnes of cargo and 16.62 million standard containers. In 2015, it opened 15
new international routes. This put the city fourth in the mainland in terms of tonnage, and sixth in the world. The 2020 target is 600 million tonnes.
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GUANGZHOU
Air and sea links aside, Guangzhou is also rapidly developing rail and road networks.
The city has the largest high‑speed railway interchange in southern China. In 2014, three major high‑speed train routes of an estimated total of 723 kilometres started operation,
running from Guangzhou to Nanning (Guangxi Province), Guiyang (Guizhou Province),
and Wuhan (Hubei Province). With trains running a maximum of 350 kilometres an hour, the new rail system has greatly reduced commuting time. Travel between Guangzhou and Guiyang, for example, now takes 4 hours, down from the previous 20 hours.
With neighbouring cities, Guangzhou is building a dense network of intercity railways
and expressways. There is the 136‑kilometre Guangzhou‑Shenzhen‑Hong Kong Express
Rail Link, which will cut travelling time between Guangzhou and Hong Kong to 48 minutes, from the current 2 hours. There is also the 143‑kilometre Guangzhou‑Foshan ring railway, and the 87‑kilometre Guangdong‑Dongguan‑Shenzhen intercity railway. All three systems are due to be completed by 2018.
A 225 kilometre‑expressway stretching from Guangzhou to Zhaoqing via Foshan will being
operations in 2019. Within the city itself, Guangzhou has 250 kilometres of subway lines, the
third largest network in China. Another 300 kilometres are now being built. Guangzhou’s
aim is to develop a one‑hour commuting circle in the PRD region, with the city as the centre.
INTEGRATION WITH FOSHAN ACCELERATES The city will continue to expand geographically, especially along the eastern shore of
the Pearl River. This will include the new 30‑square‑kilometre Pearl River Innovation Key
Area, and the Pazhou and Pearl River New Area and International Finance City. It aims to
attract world‑class office building, financial services, and trade and exhibition facilities.
The Pazhou area will have a higher density of roads, light rail and tram stations. Its commercial areas will be designed in the Lingnan style of southern China, with pedestrian walkways, ‘intelligent’’ infrastructure and well‑designed underground space. The Pazhou
Internet Innovation Zone has already attracted companies like Alibaba, Tencent, Weipinhui and other high‑profile investors.
Guangzhou is making steady progress in integrating its neighbour Foshan. The concept
of the Guangzhou‑Foshan Economic Circle was first raised in 2002. Proposals were then
made on how to bring the two cities closer, with a focus on infrastructure. In 2007, the
two cities started to integrate their respective intercity railways. In November 2010, the 32‑kilometre Guangzhou‑Foshan metro line was completed, the first of its kind in China.
In January 2011, the 117‑kilometre Guangzhou‑Foshan‑Zhuhai high‑speed train service
brought these cities even closer together. In March 2016, the Guangzhou‑Foshan Intercity
GUANGZHOU
Rail started operation, reducing travelling time to 15 minutes between the two cities.
Three other major transport projects are underway, further connecting the two cities into
one big metropolitan area. First is the 143‑kilometre Guangzhou‑Foshan Ring Railway,
with one section running from west of Foshan to the north of Guangzhou, at a maximum speed of 160 kilometres per hour. Second is the 32‑kilometre Guangzhou‑Dongguan
high‑speed railway, which will pass through Foshan. Then, there is the 225‑kilometre
Guangzhou‑Foshan‑Zhaoqing Highway, extending to the Wuzhou Highway in Guangxi. All are due to be completed by 2020.
Other integration issues, such as public services, local budgets and complementary
industrial development, have not made much progress though.
PROPERTY PRICES RISE DESPITE CURBS The property market of Guangzhou is, with Beijing,
Shanghai and Shenzhen, one of the four most important markets in the mainland. According to the
city’s Statistical Bureau, investment in completed real estate in 2015 was RMB213.8 billion, up 17.7 per
cent over 2014. Of this, investment in commercial residential housing was RMB133.1 billion, up 33.8
per cent. This included RMB48.69 billion in units of less than 90 square metres, up 114.6 per cent;
RMB33.7 billion in units of more than 144 square
metres, up 16.8 per cent; and RMB7.92 billion in villas and upmarket apartments, up 71.2 per cent.
Just as in the rest of the country, Guangzhou
continues to experience property price rises despite
government controls. The State Statistical Bureau
said prices of residential property in Guangzhou in August 2016 rose 2.4 per cent from the July level, its 17th successive monthly increase.
Askci Corporation, a Shenzhen‑based consultancy
firm, reported that Guangzhou’s average residential property price in August 2016 was RMB17,425 per
square metre. In the upmarket districts of Tianhe, it was RMB42,321 per square metre.
Canton Tower, Guangzhou
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GUANGZHOU
HIGHLIGHTS OF GUANGZHOU’S 13th FIVE‑YEAR PLAN (2016‑2020)
1.
Targets for 2020. Guangzhou’s GDP will grow by an annual average of at least 7.5 per cent, reaching RMB2.8 trillion and an estimated per capita GDP of RMB180,000
by 2020. Retail spending will reach RMB1.16 trillion and the added value of the financial sector will account for 12 per cent of the city’s GDP. Urban and rural per capita incomes will double from 2010 levels.
2.
Innovation and Technology. By 2020, high‑technology products will account for 49 per cent of the industrial output of large‑scale enterprises. Investment in R &
D will account for 3 per cent of GDP, with 25 patents for every 10,000 people. There will be six major innovation districts, including the Guangzhou High‑Technology Zone, for industries such as new materials and knowledge‑intensive services. Other districts include the Sino ‑Singapore Guangzhou Knowledge City, Guangzhou International Innovation City, Guangzhou International Biotechnology Island, and Nansha Mingzhu Science and Technology City.
3.
Transport Hub. Guangzhou will accelerate development of its airport, seaports, railway networks and other transport networks. By 2020, the passenger volume of
Guangzhou White Cloud Airport will reach 80 million visitor arrivals, and freight and postal volume 2.5 million tonnes. The capacity of the Guangzhou Port will reach 600 million tonnes and 2.5 million standard containers.
4.
Better living environment. Guangzhou will gradually reduce the discharge of waste materials. By 2020, the average annual density of PM2.5 will be lower than 30
micrograms per cubic metre. The treatment of urban waste water and urban non‑toxic daily waste will reach 95 per cent and 100 per cent respectively. Green area per urban citizen will reach 18 square metres.
5.
Improve public welfare. During this five‑year period, the number of new urban jobs created will be 1 million, the average lifespan will reach at least 82, and the number
of beds in retirement homes per 1,000 aged people will reach 40. The resident population will reach 15.5 million by 2020.
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SHENZHEN
SHENZHEN
FROM VILLAGE TO HIGH‑TECH MEGAPOLIS
The history of Shenzhen is one of the most remarkable of any city in the world over
the last 40 years. Originally a fishing village, it was chosen in 1978 by Deng Xiaoping
to be China’s first Special Economic Zone (SEZ) because of its proximity to Hong Kong. Since then, it has grown into one of the most important industrial, high‑technology, and logistics centres in China. It houses one of the country’s two stock exchanges.
Shenzhen’s economy grew initially through investments by Hong Kong and overseas
Chinese companies which moved their factories to the SEZ to take advantage of low
land and labour costs. They shipped their products out via Hong Kong to buyers in Japan, the United States of America and Europe. Millions of migrants from all over China flocked to Shenzhen to work in new factories and offices. It was also attractive as a model city in which entrepreneurs could try new ideas and projects impossible elsewhere in China.
Since the mid‑1990s, Shenzhen has sought to move up the technology ladder.
In September 1996, it was picked by the central government to establish one of China’s six “world‑class strategic science and technology zones” – the 11.56‑square
‑kilometre Shenzhen Hi‑Tech Industrial Park (SHIP). Set up in Nanshan in southwest Shenzhen, the park was designed for “advanced” industries, such as biotechnology,
pharmaceuticals, chemicals, computer software, electronics, and telecommunications equipment. In 1999, Shenzhen set up another important facility, also in Nanshan, the Shenzhen Nanshan Hi‑Tech Incubator (SNHI), to help technology start‑ups.
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SHENZHEN
SILICON VALLEY Today, Shenzhen is China’s Silicon Valley, home to successful high ‑tech domestic
companies, such as BYD, Dingoo, G’Five International, Hasee, Huawei, JXD, Konka, Netac, Skyworth, Tencent and ZTE. Many are based in Nanshan, which now contributes 20 to 25 per cent of Shenzhen’s GDP.
Nanshan, where 80 per cent of the SEZ’s start‑up companies are, is known as the Big
Incubator. By end‑2015, SNHI had established 16 incubation bases, with a total floor
space of 1.1 million square metres. It offers start‑ups affordable office space, financial subsidies, platforms to exchange resources.
Shenzhen is also known as “the Silicon Valley of hardware” because of the easy
availability of computer components, accessories and gadgets. It is home to the Huaqiangbei Electronics Market, one of the largest of such markets in China and the world.
High property prices, however, are deterring companies, start‑ups and corporate giants
alike, from expanding in the city. In April 2016, the average residential property price in Shenzhen rose a stunning year‑on‑year 90 per cent to RMB49,876 per square metre, the
highest in China, according to the SEZ’s Urban Planning, Land and Resources Commission. Companies are moving to cheaper destinations. Huawei, the telecommunications giant,
has relocated some of its mobile business to neighbouring Dongguan, while ZTE, another benchmark high‑tech enterprise, is building a production base in Guangdong’s Heyuan city.
BRIDGEHEAD OF NEW SILK ROAD Shenzhen is actively promoting the One Belt, One Road national project, organising
seminars and forming think tanks, with a focus on this initiative. Local officials say the city already has extensive business ties with Belt‑Road countries. The newly upgraded
Qianhai‑Shekou Free Trade Zone will add momentum to such cooperation. The zone is new, flexible, with enough space and capital to adapt itself to the latest policies and opportunities.
Shenzhen’s global transport links are another plus, in its attempt to become, as its
mayor Xu Qin said, “the bridgehead” of the 21st century Maritime Silk Road. Its container port is the world’s third‑largest, handling 24.21 million TEUs (20 foot‑equivalent units)
in 2015; it has 205 container shipping routes, the largest number of any port in China. Its
airport, the Shenzhen Bao’an International Airport, is investing RMB11.2 billion in a third runway and a fourth terminal.
SHENZHEN
Soaring skyscrapers, Shenzhen
At end ‑2015, Shenzhen had a resident population of 11 million and an area of
approximately 2,000 kilometres. In 2015, it ranked fourth nationwide in GDP, at RMB1.75
trillion, an increase of 8.9 per cent over 2014. The service sector accounted for 58.8 per cent of GDP, while manufacturing accounted for 41.2 per cent. Its foreign trade in 2015
was RMB2.75 trillion, a year‑on‑year fall of 8.2 per cent, with exports down 6 per cent to RMB1.64 trillion, and imports also down 11.1 per cent to RMB1.11 trillion. Its exports
accounted for 11.6 per cent of the national total and 41.1 per cent of exports from the whole of Guangdong province. Its per capita GDP in 2015 was RMB157,985, and retail sales were RMB401.4 billion.
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SHENZHEN
Since the SEZ was established, it has posted one of the fastest growth rates in the
world, with an annual average growth of about 27 per cent between 1980 and 2006. This has since slowed as external demand and domestic conditions have changed. For the first two decades, it manufactured cheap, labour‑intensive products such as toys,
shoes, garments and sporting goods. But the rising costs of labour and land and stricter environmental standards have forced companies to move their operations to inland
provinces or cheaper countries like Vietnam, Indonesia and Bangladesh. The city now
sees its future in technology, logistics, banking, insurance and other services. It also aims to be a retail, leisure and cultural centre.
FOREIGN INVESTMENT Foreign investment has played a critical role in Shenzhen’s success. It began with
investment from Hong Kong, overseas Chinese and Taiwan; later, companies worldwide came. In 2015, contracted foreign investment was US$25.60 billion, a year ‑on ‑year increase of 135 per cent; utilised foreign investment was US$6.50, up 11.9 per cent.
Over 90 per cent of foreign direct investment is in manufacturing; over 100 multinationals
on the Fortune 500 list are among the investors. Wal‑Mart opened its China operations in Shenzhen in 1996, and now bases its global sourcing and China headquarters there. Other major foreign companies include IBM, Mitsui, NEC, Sony, Samsung, Hitachi, Philips, Toshiba and Sumitomo.
Domestic giants have also established their headquarters or major businesses in
Shenzhen. These include China Merchants Bank, Ping An Insurance, BYD Automobile
(a pioneer in the development of electric cars), TCL (the number one TV brand), CSG Holdings (the largest national architectural glass manufacturer), and Vanke (the country’s
largest residential real‑estate developer). Taiwan’s largest company, the Hon Hai Group (Foxconn), has a major manufacturing plant in Shenzhen.
The city is a leading manufacturing centre for many kinds of products. In 2015,
the most important were telecommunications equipment, computers and electronic
equipment, electrical machinery, petrochemicals and gas, electric power, specialised equipment, electrical cables, programme exchange equipment, clean ‑energy vehicles,
color televisions, mobile telephones, digital cameras, copying and printing equipment, and integrated circuits.
The city is one of the world’s biggest producers of mobile phones. In 2015, it produced
370.3 million units, down 4.9 per cent from a year earlier.
SHENZHEN
INDUSTRIAL ZONES AND QIANHAI Shenzhen has established several industrial zones, in addition to SHIP.
One is the 158.5‑square‑kilometre Shenzhen High‑Tech Industrial Development Zone,
next to Shenzhen Bay, and is surrounded by tourist facilities and shopping centres. The
zone includes key industries as well as R & D, incubation of science and technology, higher education, and export processing. It also targets electronics, information technology, bio ‑technology, and integrated machinery for growth.
The Shenzhen Grand Industrial Zone encompasses Pingshan Township and Kangzi
Township in Longgang district. Its major sectors are information industry, advanced technology, real estate, trade and services. Within this 174.4‑square‑kilometre zone is the
3‑square‑kilometre Shenzhen Export Processing Zone, one of the 15 such zones approved
by the State Council. Set up in 2001, this smaller zone aims to attract electronics, information technology, and equipment manufacturing.
Growth in future will be concentrated in the newly designated Qianhai‑Shekou Free
Trade Zone, one of the three districts forming the Guangdong Pilot Free Trade Zone;
Hengqin and Nansha are the other two. This new Shenzhen free‑trade area consists of two regions, the 15‑square‑kilometre Qianhai Zone and the 13.2‑square‑kilometre Shekou Zone. Officially launched in April 2015, the Qianhai‑Shekou Zone offers tax and other
incentives not available elsewhere in China. Its development focus is on modern services, such as finance, technology, logistics and information services. It is expected to have 18 million square metres of office space and a working population of 650,000, when developed fully.
The Qianhai‑Shekou Free Trade Zone is offering financial institutions concessions
unrivalled elsewhere in the mainland. Hong Kong banks are allowed to provide commercial
renminbi loans to mainland companies based in the zone. China’s central bank has said that such loans will not be subject to benchmark rates it sets for loans in the rest of China.
In November 2015, HSBC established a joint venture securities company in Qianhai with the Shenzhen Qianhai Financial Holdings Company.
The zone will be covered by three rail lines, including the Guangzhou‑Dongguan
‑Shenzhen Intercity Railway and the Hong Kong‑Shenzhen Western Express Railway. At
end‑June 2016, it had contracted foreign investment amounting to US$28.4 billion. A total of 37,000 companies have registered in the zone, including China Resources, the Lippo Group, HSBC and the Bank of East Asia.
Shenzhen also plans to upgrade its three existing business areas. One is Futian, its
political and cultural centre, which will be developed into a major financial and commercial
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SHENZHEN
centre with a target work force of 260,000. It is well served by four subway lines, with a
fifth line planned. It targets to have 6.4 million square metres of office floor space, more than double the current 2.6 million.
The second area is Shenzhen North Station Business District, which will mainly have
companies in the sectors of finance, information services and e‑commerce. It is expected
to have a working population of 250,000. The district is served by two subway lines, with
a third under construction. The third area is the Airport District, designated for aviation, high‑end logistics, conventions, creative industries and technology services.
ONE‑HOUR COMMUTING CIRCLE Shenzhen is improving its transportation network, placing itself at the centre of a one
‑hour commuting circle that includes Guangzhou and Hong Kong. Already served by
major high‑speed trains to Xiamen, Guangzhou and Hong Kong, the SEZ is constructing another eight intercity railways to Guangzhou, Zhongshan, Zhuhai, Jiangmen, Macao and
Hong Kong. Another high‑speed train, to run between Shenzhen and Ganzhou in Jiangxi, will be completed in 2020.
Inside the SEZ itself, more metro lines will be added, with major stops in Futian, Qianhai
and the North Station. Three subway lines in Shenzhen were scheduled to open in 2016. By 2018, an outer ring road linking Shenzhen’s 10 expressways will be completed. A
Shenzhen‑Zhongshan tunnel is being planned, a project which will cut travelling time between the two cities from the current two to three hours to 30 minutes. A third tunnel
to the Shenzhen Airport will also be built, but requires reclamation from the sea; it is due to go into operation in 2018.
FINANCE AND STOCKS Shenzhen is home to China’s second biggest stock market after Shanghai. As of August
22, 2016, it had 1,800 listed firms, of which 478 were on the Main Board, 795 on the
Small and Medium Enterprise (SME) Board and 527 on the ChiNext market. ChiNext is
the local equivalent of Nasdaq in New York. Market capitalization was US$3.33 trillion, with US$1.08 trillion on the Main Board, US$1.46 trillion on the SME Board and US$794 billion on the ChiNext market. The average price to earnings ratio was 41.95 in mid‑2016 – nearly four times that of shares on the Hong Kong stock market.
On August 16, 2016, the mainland and Hong Kong regulators announced an agreement
on the Shenzhen‑Hong Kong Stock Connect, which will allow investors in one market
SHENZHEN
to trade shares in the other. This follows the opening of a similar stock ‑link programme between
Hong Kong and Shanghai in November 2014.
The Shanghai bourse is bigger
than the one in Shenzhen in terms
of
capitalization.
But
Shenzhen, the world’s seventh
largest exchange, is likely to prove more attractive to foreign investors because the fastest ‑growing
Chinese
firms
are
listed there, in sectors such as
Splendid China Folk Village, Shenzhen
technology, pharmaceuticals, and clean energy. The link will open 880 stocks to foreign investment, worth more than US$1 trillion in market capitalization. Under the agreement, there will be no ceiling on the total amount of Chinese shares foreigners can own. Market analysts expect the new link to start at the end of 2016.
The city is an important banking centre and home to four major financial institutions –
Ping An Insurance, China Merchants Bank, Shenzhen Development Bank and Shenzhen City Commercial Bank.
SOARING PROPERTY PRICES The property market of Shenzhen is booming. It is one of the “brand” cities of China,
together with Beijing, Shanghai and Guangzhou. According to official figures, investment in
the city’s property market in 2015 was RMB133.1 billion, an increase of 24.5 per cent over
2014. Easy access to bank credit has helped to fuel this boom. Midland Realty, a leading
Hong Kong property agency, estimated that new housing units totalling 5.5 million square metres would come on the market in 2016, mainly in the upmarket Nanshan District and areas around the Qianhai‑Shekou zone.
In March 2016, 409 units of a high‑end development in Shenzhen, called Peninsula
Phase Three, sold for an average price per unit of RMB10 million, or about RMB100,000
per square metre, a tenfold increase from RMB10,000 in 2006. Units in a nearby luxury project, Shuangxi Garden, sold at an average of RMB125,000 per square metre. Both developments are near the Qianhai‑Shekou zone.
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SHENZHEN
HIGHLIGHTS OF SHENZHEN’S 13th FIVE‑YEAR PLAN (2016‑2020)
1.
Targets for 2020. By 2020, the city’s GDP will reach RMB2.6 trillion, an increase of nearly RMB1 trillion over the RMB1.75 trillion recorded in 2015. Over the five‑year
period, the average annual GDP growth will be about 8.2 per cent.
2.
Industries: By 2020, the city will have more than 10,000 major high‑technology firms. The output of large‑scale companies in new and strategic sectors will reach RMB3
trillion. That of large‑scale “future industries” (advanced industries) will reach RMB1 trillion. These strategic industries include integrated circuits, high‑end medical imaging, energy
‑efficient vehicles, high ‑end materials and energy ‑saving industries include: satellite manufacturing and applications, aviation electronic equipment, and robots.
3.
Innovation and creativity. Shenzhen will support companies taking part in large national science and technology projects, and encourage them to set up
laboratories in priority sectors, such as engineering.
4.
Develop a “headquarters economy”. This means attracting Fortune 500 companies and large domestic firms to locate national, Asia‑Pacific and global headquarters
in the city. According to the 2016 draft budget, Shenzhen was to spend RMB10 billion in capital for equity cooperation with large state firms planning to set up their headquarters in the city.
5.
High‑end services. Shenzhen is to improve the competitiveness of its financial sector, modern logistics, accounting, legal, architectural design and other specialised
services. By 2020, the added value of modern services will account for about 71 per cent of the city’s service output.
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FOSHAN
FOSHAN
CITY OF CERAMICS AND KUNG FU
Foshan is an ancient city with a long history of trade and manufacturing. Just 20
kilometres from Guangzhou, it has always benefited from its neighbour’s status as the
global trading centre of China for the last 1,000 years. For much of the 20th century,
Foshan was in decline because of the wars and political campaigns that ravaged the country. During the first 30 years of the Communist period, it was not given priority in the state planning system. But this changed dramatically with the onset of economic reforms initiated since 1978.
Thanks to billions of dollars in outside investment, flexible and pioneering local
government policies, and the help of its overseas diaspora, Foshan has become a major manufacturing centre. It produces 60 per cent of China’s building ceramics and 25 per
cent of its compact discs. The city also accounts for about 20 per cent of the national output of the electrical appliances.
Foshan is on course in its merger with neighbouring giant Guangzhou to form one of
China’s greatest metropolitan areas. The concept was first raised in 2002. Since then, the integration of their transport systems has proceeded steadily.
Foshan has a land area of 3,875 square kilometres, and at end‑2015, it had a resident
population of 7.43 million. In 2015, Foshan reported a GDP of RMB800.4 billion, an
increase of 8.5 per cent over 2014. Its per capita GDP was RMB108,299. The added value of the primary sector (agriculture) was RMB13.64 billion, up a year‑on‑year 2.6
per cent; the secondary sector (manufacturing) was RMB483.9 billion, an increase of
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FOSHAN
7 per cent; and the tertiary sector (services) amounted to RMB302.9 billion, up 10.3 per cent.
Industrial added value output rose 7.7 per cent to RMB467.3 billion in 2015. Retail
sales in the year amounted to RMB195 billion. Investment in fixed assets rose 16.2 per cent to RMB303.6 billion, while investment in real estate rose 13.5 per cent to
RMB94.54 billion, with investment in residential housing rising 10.4 per cent to RMB64.46 billion.
In 2015, foreign trade was US$65.72 billion, down 4.5 per cent from 2014. Exports
rose 3.2 per cent to US$48.2 billion and imports fell 20.7 per cent to US$17.5 billion.
Contracted foreign investment was US$2.899 billion, down 22.3 per cent, while utilised foreign investment fell 10.5 per cent to US$2.377 billion.
BUDDHISM AND CERAMICS Foshan means “mountain of the Buddha’. It was a centre of Buddhism in Guangdong
and during the Qing Dynasty (1644‑1912) the city had more than 160 temples and
monasteries. During the Ming Dynasty (1368 ‑1644), Foshan became a national
manufacturing base for industrial and craft products in domestic and overseas market.
The main industries were ironware and ceramics, thanks to the availability of local materials. Merchants and craftsmen came to the city, setting up guilds and an extensive network of rivers and streams facilitated transport of these goods out of the city.
During the last century of the Qing Dynasty (1368‑1644), it became a major producer
of porcelain, with 107 kilns employing more than 60,000 workers. Silk was another major product. By the 1880s, raw silk from Foshan had driven Italian competition out
of the European market. And by the turn of the century there were more than 140 silk
factories in the city. However, Foshan’s economy declined in the 20th century, like the rest of war‑torn China.
The city’s economic revival began in the early 1980s when it was incorporated into
the Pearl River Delta region and was able to enjoy similar policy advantages as the Special Economic Zones (Shenzhen, Zhuhai, Shantou and Xiamen), ahead of the rest
of the province and the country. Substantial investment from abroad, including from its large overseas community, combined with local entrepreneurship and collective rural industry to create a massive industrialisation of the city in the post‑1978 era.
Foshan’s industrialisation has taken place at the township and village levels, creating
production clusters in Nanhai, Shunde and Zhongshan, which was part of Foshan before 1988. Economic activities then spread, based on an industrial foundation
FOSHAN
built over centuries. Towns like
Shiwan and Xiqiao, which were
the centres of ceramics and raw silk in the 19th century, have
again prospered with new lines of related businesses. Shiwan
first
imported
new
building ceramic production lines from Italy in 1983. Since then, it
has relied on imported technology to develop a strong production
base for building and sanitary
ceramics. By 2003, a large cluster
of several hundred manufacturing firms had emerged in the city. By
2006, with tiles produced mostly
in Foshan, China had for the first time surpassed Italy and Spain in tile exports. In 2007, building ceramics
produced
in
Foshan
constituted 40 per cent of the
national output and 25 per cent of global production. Since
the
2000s,
however,
Foshan has discouraged polluting ceramic
production,
environmental
tightening
controls
and
Nanhai Baofeng Temple, Xiqiao Mountain National Forest Park, Foshan
encouraging the relocation of factories outside the city. Towards the end of the
decade, the ceramics cluster in Foshan had expanded to nearby Qingyuan, Heyuan and Zhaoqing. As a result, the number of ceramics plants in Foshan has dropped from 500 in the year 2000 to just 60 now; remaining plants are involved in the higher end of production.
Foshan was also a pioneer in the disposal of state firms, selling them to their
managers, outside investors and foreign companies. As a result, there is a booming private sector in the city. In 2015, private enterprises accounted for 70 per cent and 80 per cent of the city’s economic output and economic growth respectively.
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FOSHAN
ELECTRICAL APPLIANCES AND CERAMICS The two best‑known private companies are Midea and Galanz, which have become global
brands. Midea Group reported revenue of RMB139 billion and net profits of RMB12.7
billion in 2015, an increase of 21 per cent. During the year, it set up its first R & D centre
in the United States and became a Forbes 500 company. It has seven overseas production bases in Vietnam, Belarus, Egypt, Brazil, Argentina and India, and three overseas R & D
centres. It announced in March 2016 that it would buy the home appliance unit of Japan’s Toshiba for US$490 million.
Galanz claims to be the world’s largest producer of microwave ovens and a leading
producer of air conditioners, refrigerators, washing machines and dishwashers. It has a
global sales network in nearly 200 countries and regions and, as of the end of 2014, had applied for more than 1,900 patents worldwide.
Like other PRD cities, Foshan is working hard to upgrade its industries through
technology and better planning. In March 2016, the city launched the Foshan Internet+
Innovative Start‑up Industrial Park, to accommodate data‑based businesses and facilitate the transformation of various industries. Clients of the park include the National
E‑Government Network (southern China branch), an IBM cloud platform for the Internet of Things, and the Big Data base of China Unicom in southern China.
Another springboard of Foshan for promoting innovation is the Foshan National Hi
‑tech Industrial Development Zone. Set up in 1992, the zone is 18 kilometres from the city centre, in Shishan Township. It is designated for the following industries – electronics, information technology, new materials and optics. In 1998, with the consent of the
Ministry of Science and Technology, the city integrated its six main industrial parks into
the zone. Its core areas are the Nanhai High‑Tech Zone and the Sanshui Leping Park,
which together have a combined area of 400 square kilometres. It has attracted major foreign companies such as Volkswagen, Siemens, Osram, BASF, Fuji, Honda and Toshiba. European companies have a strong presence in the zone, accounting for more than half of the companies in the Nanhai zone.
GUANGZHOU‑FOSHAN METROPOLITAN AREA Foshan continues to work closely with Guangzhou on urban planning and infrastructure
to promote the integration of the two cities. They are now linked by a subway, which opened in November 2010, the first in China to connect two cities. In addition, a high
‑speed train runs through Foshan connecting it with Guangzhou at one end and Zhuhai
FOSHAN
at the other. With a length of 117 kilometres, it went into operation in March 2016.
Other integration issues, such as public services, local budgets and industrial cooperation between the two cities, have moved much more slowly.
Foshan has three major transport projects underway, all due to be completed by 2020.
First is the 143‑kilometre Guangzhou‑Foshan Ring Railway, with one section running from west of Foshan to the north of Guangzhou, at a maximum speed of 160 kilometres per hour. Second is the 32‑kilometre Guangzhou‑Dongguan High‑Speed Railway, which
will pass through Foshan. Then, there is the 225‑kilometre Guangzhou‑Foshan‑Zhaoqing Highway, extending to Wuzhou Highway in Guangxi.
The city has a small airport, Foshan Shadi Airport. It was built in 1954 as a military facility
and opened to civilian use in 1988. From 2002‑2009, the military banned civilian flights,
but lifted the ban in 2009. Only two civilian airlines use the airport, which handled 296,511 passengers and 671.7 tonnes of cargo in 2015. In February 2015, the city government
commissioned a feasibility study into a possible new airport in the Gaoming District. It would serve not only Foshan but also Jiangmen, Zhongshan and Zhaoqing, and relieve the pressure on the nearby Baiyun (White Cloud) Airport in Guangzhou, one of the three
busiest airports in China. The proposal has aroused a strong debate because the PRD region already has five major airports – White Cloud, Hong Kong, Shenzhen, Macao and Zhuhai.
Thousand Lantern Lake, Foshan
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FOSHAN
MIXED YEAR FOR PROPERTY Property is an important part of the city’s economy. In 2015, investment in real estate
was RMB94.54 billion, an increase of 13.5 per cent. Of this, RMB64.46 billion was in residential property, up 10.4 per cent. The area of completed commercial housing was 3.63 million square metres, a fall of 32.8 per cent from a year earlier, while commercial
housing under construction was 67.54 million square metres, an increase of 17.8 per cent.
The year 2015 was a mixed year for the property market. Over‑supply and a slowing
economy hurt demand, causing developers to delay completion of their projects. In May
2016, the average price of a new apartment in Foshan was RMB9,256 per square metre, an increase of 5.9 per cent, while that of a second‑hand apartment was RMB8,409, up 1.4
per cent. The highest price was in the Dancheng district, at RMB10,555, down 6.6 per cent
from a year earlier. In an effort to boost demand, from May 2015, the city government lifted all restrictions on the purchase of residential property, the first city in Guangdong to do so. As a result, prices have recovered slightly.
POPULAR WITH TOURISTS Foshan is a popular destination for tourists interested in the culture of southern China.
It is most famous as the hometown of Yip Man, the man who created Wing Chun, the
most popular form of martial arts, practiced by more than 2 million people in over 60
countries. In the city’s historic centre is a museum dedicated to Yip Man, the mentor of kung fu superstar Bruce Lee. The city also has many temples, including one named
Western Hills, which was built in 1541 in the Ming Dynasty. There is also the ancestral home of Kang Youwei, a prominent scholar and leading reformer of the late Qing and
early Republican periods. His home is a cultural heritage site protected by the central
government. In 2015, the city had 42.28 million tourist arrivals, an increase of 5.83 per cent over 2014. Of these, foreigners accounted for 244,600, up 3.65 per cent. Tourism revenue in the year was RMB54.63 billion, up 10 per cent.
FOSHAN
HIGHLIGHTS OF FOSHAN’S 13th FIVE‑YEAR PLAN (2016‑2020)
1.
Targets for 2020. Foshan aims to increase GDP by at least 7.5 per cent a year to RMB1.15 trillion. Per capita GDP is targeted to rise annually by 7 per cent. The target
for fixed‑asset investment is RMB500 billion, rising an average annual 12 per cent. Retail sales are expected to climb to RMB410 billion, an average annual increase of 8.5 per cent. The added value of the service sector is set to account for more than 40 per cent of the city’s GDP, while the added value of advanced manufacturing will account for 45 per cent of industrial added value. Spending on R & D will account for 3.2 per cent of the city’s GDP. There will also be 20 patents per 10,000 persons. The average disposable income of local residents will reach RMB38,501, an annual increase of 7.9 per cent.
2.
Environmental preservation. Foshan will maintain the area of cultivated land at 57,126 hectares or above. It will limit the amount of water and energy used to produce a unit
of GDP at the level set by the provincial government. It will reduce the discharge of polluted materials and control the average density of PM2.5 at 35 micrograms per cubic metre.
3.
High‑tech zone. The Foshan National High‑tech Industrial Development Zone aims to have an industrial output of more than RMB600 billion by 2020, of which the three
sectors – equipment machinery, photoelectric products and auto parts – will each account for RMB100 billion. Foshan hopes to become one of the top 20 high‑tech zones in China.
4.
Industrial upgrading. The city will make intelligent manufacturing a priority in industrial planning. It will create an applied creative experimental zone, implementing the
national Internet+ policy.
5.
Integration with Guangzhou. By 2020, the light rail system between Guangzhou and Foshan will be basically completed, with nine connecting points. Foshan will
accelerate the construction of a high‑speed train network between the two cities. It will also initiate research on the development of major bilateral infrastructure projects.
6.
Culture Industry. Foshan will promote the blending of its traditional porcelain culture with modern innovative designs. Foshan will develop its three main cultural brands –
“Kung Fu, Fine Cuisine and Traditional Chinese Medicine”.
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DONGGUAN
DONGGUAN
BATTERED GLOBAL FACTORY REBOUNDS
Dongguan used to be a collection of villages and towns covered by plantations of
lychee favoured by the ladies of the imperial court. Now it has been transformed into a global factory that in 2015 produced a GDP of RMB627.5 billion and exports of US$103.7 billion. It achieved this by becoming a processing zone for labour‑intensive industries
from Taiwan, Hong Kong and other outside investors. Its main industries are electronics and information technology, electric machinery, textiles and garments, furniture, toys,
paper, food and beverages, and chemicals. Many of the items you buy in Wal‑Mart and
Carrefour, like computers, toys, shoes and consumer electronics, are made in Dongguan. It ranks among the top five exporting cities in China.
During the last decade, the city’s economy has been hit by two shocks – the revaluation
of the renminbi after 2006 and the financial tsunami of 2008. Both badly affected its key
strength as a low‑cost export centre. As a result, hundreds of companies closed and moved
out and thousands of workers were laid off. Since then, the city has changed its economic
model, selling more to the domestic market and moving into new products like smart phones, integrated circuits, electronic components and IT goods.
Over the last six years, Dongguan has recorded an annual average GDP growth of 8.3
per cent; this is down from 19.5 per cent in 2005 but the city remains a strong economic player nationwide, even in new, high‑tech areas. Over 2,800 of its firms are involved in
the IT industry. It is one of the world’s largest producers of mobile telephones, with output of 236.43 million units in 2015, an increase of 24.5 per cent over 2014.
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DONGGUAN
STILL GROWING STRONG At end‑2015, Dongguan had a resident population of 8.25 million and a land area
of 2,465 square kilometres. Dongguan posted a GDP of RMB627.5 billion in 2015, an
increase of 8 per cent over the year before. The added value of the primary sector was RMB2.05 billion, down 0.4 per cent. The added value of industry was RMB290.3 billion, up 6.2 per cent, and that of the service sector was RMB335.1 billion, up 10 per cent. The percentage share of the three sectors in the city’s GDP was 0.3, 46.3 and 53.4 respectively.
The added value of large‑scale modern manufacturing enterprises was RMB129.9 billion,
up 8.5 per cent, and that of modern services (such as finance and logistics) RMB200.5
billion, up 12.7 per cent. Output of pharmaceuticals grew 6.8 per cent, with electronics and telecom equipment rising 13.2 per cent. Production of integrated circuits rose to
472.2 million units, up 213 per cent, and electronic components 1.14 trillion pieces, up 3.9 per cent.
Foreign trade was US$167.6 billion in 2015, up 3.1 per cent, with imports down a year
‑on‑year 2.4 per cent to US$63.96 billion and exports up 7 per cent to US$103.7 billion. Of the exports, electrical and telecom products accounted for 68.2 per cent, or US$70.7
billion. Contracted foreign investment rose 17.2 per cent to US$5.06 billion, while actual foreign investment rose 17.5 per cent to US$5.32 billion.
In 2015, fixed‑asset investment was RMB144.7 billion, an increase of 3.3 per cent.
Investment in real estate fell 2.2 per cent to RMB57.5 billion. Retail spending in 2015 rose
10.9 per cent to RMB215.5 billion. The average disposable income was RMB38,651, a year ‑on‑year increase of 8.2 per cent. Tourism also did well, generating income of RMB39.52
billion from 28.26 million mainland visitor arrivals, with year‑on‑year increases of 5.5 per cent and 16.1 per cent respectively. There were 3.73 million visitors from outside the mainland, earning Dongguan an income of US$1.58 billion.
FARMING AREA BECOMES WORLD FACTORY Like other cities in the Pearl River Delta, Dongguan started as an outgrowth of
Guangzhou more than 2,000 years ago. Since then, it served mostly as the production base of salt for Guangzhou and for transhipment from the south to the interior of China. In 757 A.D., Dongguan was officially named a county. In the ensuing dynasties, Dongguan continued to be an important trading town because of its transport links with eastern Guangdong and Fujian.
After 1949, Hong Kong was closed off from the Pearl River Delta region, including
DONGGUAN
Dongguan. The subsequent rapid industrialisation of Hong Kong attracted a massive migration, mostly illegal, from Dongguan and neighbouring areas. In the 1950s,
industrialisation stalled in the Pearl River Delta region. Dongguan lost its intermediary trading role and reverted back to be a rural economy of lychee and rice production, with the produce re‑distributed by the centralised planning authorities. Little was invested in the county.
When China’s economic reforms began in the 1980s, Dongguan was among the first
to benefit. Its émigrés in Hong Kong served as pioneers, setting up industrial processing bases in their hometowns with which they still had close social and lineage ties. The
volume of industrial processing increased exponentially, with manufacturers of Dongguan soon beating competitors worldwide.
GAME CHANGER The game began to change for Dongguan
in 2006, when the renminbi started to
appreciate. At end‑2006, it was worth 7.8
to the U.S. dollar; but by late October 2016, it was worth 6.77. Wages in the delta have
also risen sharply. In 2009, the minimum monthly wage in Dongguan was RMB770;
in July 2015, it rose to RMB1,510. This means that companies in the city can no
longer rely on cheap labour alone to remain profitable and competitive.
The second blow was the financial crisis
of 2008, which hit global demand. In 2009,
the city’s GDP growth slowed to 5.3 per cent, its lowest level since 1978. Exports
Dongguan
fell almost 16 per cent to US$55.17 billion, after double‑digit growth every year for the
previous two decades. GDP growth fell from 19.5 per cent in 2005, to 10.3 per cent in 2010, and 6.1 per cent in 2012 before recovering to 8 per cent in 2105.
Dongguan has rebounded because it has successfully reduced its reliance on the export
market and sold more at home. It transferred more than 1,500 low‑cost, labour‑intensive
and polluting factories to elsewhere in China. As a result, the city’s economy was gradually transformed. In 2015, the service sector accounted for 53.4 per cent of GDP, up from 48.4
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per cent in 2010. The added value of high‑tech manufacturing enterprises rose from 26.3
per cent of the total of all major industrial enterprises in 2010 to 37.2 per cent in 2015. During the same period, R & D spending doubled from 1.22 per cent of GDP to 2.3 per cent, while the number of patents per 10,000 inhabitants jumped from 382 to 1,338.
CHALLENGES ABOUND In its 13th Five‑Year Plan (2016‑2020), Dongguan admits that its development model
remains crude and unsophisticated. Some sectors make products at the medium‑ or low
‑end of the value chain, and lack key technologies and their own brands. Their industrial added value is low and their efficiency is falling. Industry is facing shrinking external
demand and the “double pressure” from firms in both developed and developing countries.
Companies must accelerate their industrial transformation, maintain growth and change their structure, according to the five‑year plan.
The plan also notes that there are bottlenecks in Dongguan’s investment environment.
There is insufficient land and the standard of energy‑saving measures is low. An “especially serious problem”, it says, is the treatment of water in the rivers that cross the
city’s borders. Innovation in science and technology is not strong enough and there is insufficient investment in R & D. There are too few highly qualified and creative people, and the structure of the labor force needs to be upgraded, it says.
In restructuring industry, Dongguan has encouraged the use of robots. It is offering a
subsidy of 15 per cent of the cost of each robot introduced by local firms, with a maximum of RMB3 million if it involves a local brand. The main industries involved are electronic
and information technology, electrical machinery, equipment manufacturing, printing
and packaging. As of October 2015, the city had budgeted RMB5.54 billion to contribute to 678 projects using robots, with an installation target of 22,576 robots.
Dongguan Central Square, Dongguan
DONGGUAN
INDUSTRIAL ZONES IN A SCENIC SETTING Dongguan has the 72 ‑square ‑kilometre Songshan Lake Science and Technology
Industry Park (SLSTP) that was established in 2001 in the geographical centre of the city. The park has a freshwater lake area covering 8 square kilometres. In 2015, the
estimated output of its large industrial firms was put at RMB157 billion, up 24 per cent
over 2014. During 2015, it attracted 294 projects, with a contracted investment value of RMB20.54 billion.
The park is divided into four areas – the Northern District, the Central District, the
Taiwan High‑Tech Park, and the Southern District. The Northern District is designated
for the development of high technology; the Central District is for education, R & D, biotechnology, new energy, new materials, and IC design; the Taiwan Park is for high‑tech
companies from Taiwan; and the Southern District is for R & D headquarters, financial services, culture and creativity projects, and biotechnology companies.
In 2006, the Dongguan Ecology Industrial Park was set up inside the SLSTP, covering
an area of 31 square kilometres. In September 2010, the SLSTP was upgraded to be a national‑level high‑tech zone. In December 2014, the city government brought the SLSTP
and the ecology park under one planning authority and made them the centre of the city’s innovation and creativity efforts.
The zone has several features. First, it has production activities in a natural setting of
lakes and mountains. This ecological section of the zone has a total area of 3.5 million square metres, including the two parks of Songhu Misty Rain and the Yuehe Lake. There
is, in addition, a National Urban Marshland Park of 6.5 million square metres, with an “ecological green road” of more than 300 kilometres. Another feature is that the zone has developed a cluster of high‑end electronic and information technology, and bio‑tech
industries. It has attracted 68 large industrial companies and 33 large service sector firms. Major companies there include Huawei Machinery, China International Maritime Containers and Yulong Communication Technology.
MAJOR TRANSPORT PROJECTS Dongguan’s transport projects under construction will connect it closer to the rest of
the Pearl River Delta. There will be the 87‑kilometre Guangzhou‑Dongguan‑Shenzhen
intercity railway, running from Xintang Station in Guangzhou to Airport East Station in Shenzhen. It will pass through most of the major railway stops in Dongguan at a speed
of 140 kilometres per hour. It is due to be completed in 2018. The Foshan‑Dongguan
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DONGGUAN
Intercity Railway will run at a speed of 200 kilometres per hour between Guangzhou’s South Station and Dongguan’s Wanghong Station. It is due to be completed in 2020.
A 13‑kilometre bridge is also being built to link Guangzhou’s Nansha to Dongguan. It
will relieve road traffic on the existing Humen Bridge for cars running in the Guangzhou ‑Dongguan‑Shenzhen area.
On May 27 2016, the city’s first subway line went into operation after six years of
construction. It runs 37.8 kilometres, with a northeast ‑southwest alignment linking
Dongguan’s various stations. A southern extension is planned, which will add 17.9 kilometres and eight stations.
In September 2015, the Dongguan Shilong Railway International Logistics Centre
began operations, an important facility to connect the city’s exporters to clients in Russia and Europe. With this facility, the delivery time for containers to Russia has been cut
in half from a previous 35 days to about 15 days. It is the third such logistics centre in
Guangdong, after Foshan and Shenzhen. The route cuts the cost of shipping a container to Europe by an average of US$200, and the time by a week. This will facilitate exports to Europe, Russia, and countries in Central Asia.
RISING PROPERTY PRICES Since early 2016, property prices in Dongguan have risen by an extraordinary level
after a sluggish year in 2015. A report in the Southern Metropolitan Daily in September
2016 said that the average price in the city’s central Nancheng District in 2016 reached RMB18,640 per square metre, compared to RMB11,106 a year earlier. One reason for the
boom is that property prices in neighbouring Shenzhen have soared. This has prompted residents and speculators to buy in the cities around it.
Dongguan has been one of these beneficiaries because it is only 40 kilometres from
Shenzhen. Total investment in Dongguan’s housing market in the first half of 2016 rose
19.5 per cent year‑on‑year to RMB29.6 billion, and the value of commercial properties sold
rose 80 per cent year‑on‑year to RMB74.6 billion. In September 2016, a 42,500‑square
‑metre plot of land in Dongguan sold for a record price of RMB12,517 per square metre at an auction, five times the bidding price, with six property developers bidding against each other, according to the Shanghai Securities News. Investment in Dongguan’s real
‑estate market in 2015 was RMB57.5 billion, down 2.2 per cent from 2014. The area of
commercial property under construction was 39.21 million square metres, up 9.4 per cent, and that of completed commercial property was 3.25 million square metres, down 20.7 per cent.
DONGGUAN
HIGHLIGHTS OF DONGGUAN’S 13th FIVE‑YEAR PLAN (2016‑2020)
1.
Targets for 2020. Dongguan aims to have a GDP of above RMB920 billion in 2020, an annual average increase of 8 per cent. Its urbanisation rate will reach 92 per
cent. Spending on R & D will account for at least 2.8 per cent of GDP. There will be at least 20 patents per 10,000 inhabitants. The number of state‑level high‑technology companies will exceed 1,500.
2.
Key industries. In 2020, the added values of the industries of electronic and information technology, equipment manufacturing, and e ‑commerce will be
RMB130 billion, RMB190 billion and RMB650 billion respectively.
3.
Education and incomes. The city aims to achieve a rate of 70 per cent of young people entering higher education by 2020. It will also double the incomes of urban
and rural residents from the 2010 levels.
4.
Services. By 2020, the service sector will account for about 55 per cent of its GDP, with modern services accounting for 63 per cent of the service sector.
5.
Improve environment. Dongguan will control emissions of PM2.5 (fine particle matter) to about 35 micrograms per cubic metre. It will maintain the basic farmland
area at 31,833 hectares, and forest cover at 37.5 per cent of Dongguan total area.
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HUIZHOU
HUIZHOU
COASTLINE CITY OF SMART PHONES AND BEAUTIFUL BEACHES
Located on the southeast coast of Guangdong Province, Huizhou was founded in the
Qin Dynasty (221‑206 BC). Historically, it was an entrepôt port and a major producer of farm goods. Most of its residents are Hakka, which means “guest people”, who migrated from the central regions of China, bringing their own dialect with them. During several
dynasties, the city provided many scholars and officials to the central government. During most of the 20th century, the city stagnated because of the wars and political revolutions that swept China. Nor did it prosper during the first 30 years of the Communist era because the state did not invest much in the city.
However, since the start of the open‑door policy in the 1980s, the economy has flourished,
as did many other cities in Guangdong. Huizhou is not as close to Hong Kong as Shenzhen and Dongguan, the first beneficiaries of these policies. But it has profited from the boom in
the rest of the Pearl River Delta. Now it has become a major producer of petrochemicals, electrical appliances, smart phones and lithium battery cells. It is the largest production base of smart phones in the world and a global manufacturer of lithium battery cells. It is
also a popular tourist destination, with scenic mountains and long beaches that attracted more than 40 million visitors in 2015.
At end‑2015, Huizhou had a population was 4.76 million and a land area of 11,599
square kilometres. In 2015, Huizhou’s GDP was RMB314 billion, an increase of 9 per cent over 2014. Per capita GDP was RMB66,231. Output of the primary sector was RMB15.09
billion, up 4.2 per cent; added value of industry was RMB172.67 billion, up 9.6 per cent;
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HUIZHOU
Hotel landmark in Huizhou
and output of the service sector RMB126.25 billion, up 8.6 per cent. The industrial output of the 1,815 large‑scale companies was RMB158.8 billion, an increase of 10 per cent. Fixed‑asset investment was RMB186.4 billion, up 16 per cent.
Foreign trade in 2015 was US$54.36 billion, down 8.5 per cent, thanks to weaker global
demand. Exports fell 4.3 per cent to US$34.78 billion, and imports fell 15.2 per cent to
US$19.58 billion. Contracted foreign investment was US$2.05 billion, down 33 per cent, and actual foreign investment fell 43.8 per cent to US$1.11 billion.
GLOBAL ELECTRONICS MANUFACTURER The city’s economy now consists of three different sectors – export ‑oriented
industrial processing (mostly in the electronic and information technology industry amd less in traditional textiles and garment industries; locally invested heavy industries (petrochemicals and automobiles); and services, in particular real estate.
Huizhou’s most famous brand is the global electronic manufacturer TCL, which has its
headquarters and much of its national production in the city. The company makes smart
HUIZHOU
phones, liquid crystal display panels, television sets, intelligent household appliances, and other multimedia electronic products. Founded in 1981, it became the largest producer of colour TV sets in China by 1992. In 2000, it began exporting its goods to Southeast
Asia, Russia, the Middle East and South America. In 2002, it signed an agreement with Motorola for the production of mobile telephones. In March 2016, it announced that
it would open factories in India and Brazil in 2017 to avoid high import duties, as its sales had expanded in those growing markets. It will also increase output of its Alcatel
OneTouch handset by 30 per cent from the current level, with the objective of becoming one of the world’s top three handset makers.
With the development of TCL as the core, Huizhou has attracted many related industries
and firms. The most important ones are Desay, Adayo, EVE Energy and Longcheer.
Longcheer is the largest mobile phone design company in China and EVE Energy is the largest provider of lithium cells.
INDUSTRIAL RE‑STRUCTURING Major firms in the value chain of smart phones have formed production clusters in
Huizhou. In 2015, they produced 207 million smart phones, 24.5 per cent of all those
produced in Guangdong. This smart‑phone production is not only the largest cluster in
China, but also in the world. Production of lithium batteries in 2015 was 318.5 million units, an increase of 6.7 per cent over 2014.
A government report published in early 2016 showed how the city’s industry is changing.
Overall industrial output value of its major enterprises in 2015 was RMB158.8 billion, a
year‑on‑year increase of 10 per cent, placing it among the fastest‑growing cities in the
Delta. Investment in industry rose 39.9 per cent to RMB71.68 billion, nearly double
the rate of increase for Guangdong as a whole. Much of the growth came from the new industries – output of pharmaceuticals grew 40.3 per cent, telecommunications equipment 36.4 per cent, and specialised machinery 30.4 per cent. Output of the traditional industries of petrochemicals, non‑ferrous metals and chemical products fell.
Many large firms have set up their own industrial research centers in Huizhou,
bringing in talent from everywhere. The city is moving into new areas such as cloud
computing, green energy, and internet content industries. According to the city government, in the first seven months of 2015, R&D expenditures constituted 4.8 per
cent of local GDP. This percentage is higher than those of South Korea and Israel, the countries that spend the most on R & D as a percentage of GDP, and even of Shenzhen, China’s Silicon Valley.
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HUIZHOU
NUCLEAR PLANT AND INDUSTRIAL ZONES Huizhou’s Daya Bay is where China’s first commercial nuclear plant was built. The
site was chosen because it was close to Hong Kong, the principal buyer of the electricity
generated and whose finance was essential for such a project at that time. It has run
successfully for more than 20 years and helped to convince the leadership in Beijing to invest heavily in this sector.
Daya Bay has two 944 megawatt pressurized water reactors based on a Framatome ANP
French design; they started commercial operations in 1993 and 1994 respectively.
The plant is 25 per cent owned by China Light and Power (CLP) Holdings, and 75
per cent by Guangdong Nuclear Investment, a wholly‑owned subsidiary of China General
Nuclear Power Group. CLP buys about 70 per cent of the plant’s output to supply the
power needs of Hong Kong. The plant produces 14 billion kilowatt hours of electricity a
year, a portion of which is imported by CLP into its system in Hong Kong. In 2009, the supply contract was extended until 2034.
Huizhou has two major state‑level development zones, the Dayawan Economic and
Technological Development Zone (ETDZ) and the Huizhou Zhongkai High‑Tech Industrial Development Zone (HIDZ).
The ETDZ was approved by the State Council in 1993, with an initial area of 9.98
square kilometres in southern Huizhou. It now covers 293 square kilometres of land and
a coastline of 63 kilometres. Industries encouraged to locate to the zone are automobile,
chemicals, and electronics. The zone had a GDP of RMB41.48 billion in 2015, an increase of 2.7 per cent over 2014.
The zone has a 65‑square‑kilometre petrochemical district, with 78 projects involving
a total investment of RMB161.8 billion at May 2016. The two main projects there are China National Offshore Oil Corporation (CNOOC)’s 12‑million‑tonne refinery and the
Nanhai Petrochemical Company, a US$4.3‑billion ethylene joint venture between CNOOC
and Royal Dutch Shell. In November 2002, Huizhou began construction of Nanhai Petrochemical, which was then the biggest joint‑venture project in China. Today, the complex has 11 processing units, producing 950,000 tonnes of ethylene and 500,000 tonnes of propylene a year.
The ETDZ has a 40‑square‑kilometre Western General Industry Area, reserved for high
added value and low‑carbon strategic industries. It has more than 100 projects with a
total investment of over RMB30 billion, in sectors such as electronic and information, automobiles, and new materials. Investors include BYD Auto and Dongfang Honda.
Next is the 21‑square‑kilometre port and logistics area, which has 76 piers that can
HUIZHOU
handle ships of up to 10,000 tonnes. Huizhou has a fine natural harbour and its port is one
of the most important in the PRD region. In 2015, the area handled 51.76 million tonnes
of cargo, up from 47.88 million in 2014. There are plans to expand the port’s annual handling capacity to 100 million tonnes and to have 200 berths.
The HIDZ, the other major industrial zone, covers an area of 500 square kilometres
in southwestern Huizhou, of which 320 square metres have been developed. It won approval from the State Council to be a state‑level development zone in 1992. In 2015,
the zone had a GDP of RMB56.6 billion, 2.3 per cent over 2014. It has attracted more than 3,000 companies worldwide, including Samsung, LG, Hitachi, Sony, Coca‑Cola, Siemens,
Schneider, Bridgestone, Sumitomo and Cree. Domestic investors include TCL, Longdeer, and Desay. About 500,000 people work in the zone.
The zone has four major parks for LED production, mobile internet devices, LCD, and
cloud computing. It also has a technological incubation centre to help technology‑based
start‑ups as well as Chinese scholars returning to the mainland to start their own business.
MODERN AGRICULTURE Huizhou is a major producer of agricultural products, with a farm output of RMB24.4
billion in 2015, up 47 per cent from 2010. The annual average income of its farmers rose by 88.5 per cent over the five‑year period to RMB15,830, an average annual increase of 13.5 per cent.
The city is developing large‑scale farm production. It has 112 production bases that
specialise in the export of vegetables, poultry, aquatic products and food processing. The Guangdong government has designated 100 model production bases for farm exports, and of these, 12 are in Huizhou, ranking it top in the province. In 2015, the city earned
US$290 million from the export of 20,580 batches of farm products. Of China’s six export bases for live eels for Japan, one is in Huizhou. Huizhou also provides one‑third of the live pigs and aquatic products as well as 40 per cent of the vegetables consumed in Hong Kong.
HIGH‑SPEED TRAINS Two major high‑speed train projects will integrate Huizhou even more with the rest of
the PRD region, shortening trips to the two metropolises of Guangzhou and Shenzhen to just an hour each way. One is the Ganzhou (Jiangxi)‑Shenzhen bullet‑train, which will have
three stops in Huizhou. Between 2016 and 2019, Huizhou is expected to spend RMB15.1
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HUIZHOU
billion on the 10.18‑kilometre part of this route. The other covers the Guangzhou‑Shantou
route, which will have four stops in Huizhou. Huizhou will invest RMB22.86 billion in this 115.4‑kilometre section of the line.
Huizhou is also building an intercity rail network linking up with Dongguan and
Shenzhen to form a region that will be accessible anywhere within half an hour by light rail. The Dongguan section, stretching 99.8 kilometres and costing RMB11.3 billion, is
due to be completed in December 2016. Construction of the Shenzhen part will begin in 2018.
PROPERTY AND TOURISM Huizhou’s property market benefits greatly from its proximity to the booming city
of Shenzhen, which has some of the highest residential prices in China. These prices are driven by both local demand and speculative money looking for a good return on investment. Huizhou’s sale of commercial property in 2015 was RMB80.04 billion, an
impressive increase of 35.9 per cent over 2014. But despite this and fearful of a future glut, developers were conservative in their future plans. Total investment in the real estate
market was RMB61.05 billion in 2015, down 8.5 per cent from a year earlier. The area of completed commercial property was 4.49 million square metres, down 40.6 per cent.
Daya Bay, Huizhou
HUIZHOU
Tourism is a pillar industry of Huizhou, which has an impressive natural landscape
that attracts tourists. In the north and east lie ranges of mountains and hills, while the urban area is in a large plain. The southern part has a long meandering coastline with
varied scenery. To visitors, the city offers mountains, rivers, the sea and forests. The Luofu
Mountain is next to the Dongjiang River and is famous for its Taoist culture. Also popular is the Nankun Mountain in the southwest of Longmen County. It is famous for its greenery
and family inns. The city also boasts West Lake, a popular spot, although it is not as famous as the one of the same name in Hangzhou, the capital of Zhejiang Province. The famous poet Su Dongpo (1037‑1101) spent time in Huizhou, where he was banished.
In 2015, Huizhou attracted 40.77 million tourist arrivals, an increase of 2.7 per cent
over a year earlier. Of these, 20.77 million stayed at least one night, a rise of 15.8 per cent; 16.44 million were mainlanders, up 14.1 per cent. Total tourism revenue was RMB33.02 billion, an increase of 20.9 per cent.
The city’s 13th Five‑Year Plan (2016‑2020) calls for the development of three major
tourist zones – an environmental area in the north, a cultural tourism area in the centre
and a beach tourism area in the south. With its long coastline, Huizhou is popular for those who like the sea and swimming. In Daya Bay, Xunliao Bay is quiet and unpolluted,
and is well known for its clear water and white sand. The waters of Daya Bay cover an area of nearly 500 square kilometres and there are nearly 100 islands and reefs in the bay.
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HIGHLIGHTS OF HUIZHOU’S 13th FIVE‑YEAR PLAN (2016‑2020)
1.
Targets for 2020. By 2020, Huizhou’s GDP will be RMB540 billion, an annual average growth of 9.5 per cent, while retail sales are expected to grow an average 11 per
cent annually to RMB180 billion. Utilised foreign investment is projected to grow 3 per cent annually in value.
2.
Industry and Services. By 2020, the added value of modern services is to rise to 50 per cent of the entire service sector, up from a share of 47 per cent in 2015. By 2020,
advanced manufacturing, as defined by the city government, will account for 63 per cent of the added value of total industrial output, an increase of 59.2 per cent over 2015.
3.
More innovation. Spending on R & D will rise from 2.4 per cent of GDP in 2015, to 3 per cent in 2020. The number of patents will increase from 5.07 per 10,000 persons
in 2015, to 8.27 in 2020.
4.
Infrastructure spending. Huizhou is to invest RMB85.4 billion on transport infrastructure during this period, 1.3 times that of the 12th Five Year Plan (2011‑2015). Trains,
roads, highways, ports and airport facilities will be expanded and upgraded. This is to meet the needs of a projected single digit annual growth in the number of passengers for most modes of transport.
5.
Improved livelihood. The income of local residents will increase by an annual average of 10 per cent per person to RMB40,000 or above by 2020.
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ZHONGSHAN
ZHONGSHAN
TIGER ECONOMY BEEFS UP REGIONAL TRANSPORT LINKS
Zhongshan is famous for its “one township, one industry” development and is one of
the “four little tigers” of Guangdong Province. Over the last 30 years, it has prospered
with an average growth of more than 8 per cent a year. It shares the title of ‘little tiger’ with Dongguan, Nanhai and Shunde, three other cities that have been transformed since 1978 into economic powerhouses. The city has benefited from its proximity to Macao and
Zhuhai, one of China’s four Special Economic Zones, and the fact that it is the native place of millions of Chinese around the world.
In the last few years, Zhongshan has been linked for the first time to the national rail
network with the completion of the first passenger and freight lines on the western side of the Pearl River Delta. These new transportation networks are accelerating its economic
and social development, bringing its people and products to the major cities of the Delta.
In 2017, a new bridge is due to link Hong Kong, Macao and Zhuhai across the Pearl River – another major transport link that will bring Zhongshan closer to its more developed neighbours.
In the 13th Five‑Year Plan (2016‑2020), Zhongshan has set out four main objectives:
to establish a world‑class modern machinery manufacturing base, build a comprehensive transport network serving the western side of the Delta, become a regional R & D centre for innovation, and develop a highly habitable city in southern China.
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STRONG GROWTH With a land area of 1,784 square kilometres and 3.21 million people at end 2015,
Zhongshan is not, by Chinese standards, densely populated.
In 2015, the city had a GDP of RMB301 billion, an increase of 8.44 per cent over 2014.
Per capita GDP was RMB94,030. Agriculture accounted for 2.5 per cent, industry and construction 54 per cent, and the service sector 43.5 per cent.
Industrial output was RMB156.6 billion, an increase of 7.5 per cent compared to 2014.
Non‑mainland companies – foreign, Hong Kong, Macao and Taiwan ones – accounted for RMB73.06 billion worth of the output, up 1.8 per cent. Next came private firms
with RMB55.45 billion, a rise of 4.6 per cent, and then state companies with RMB9.36
billion, up 8.4 per cent. Among the most important industrial sectors were lighting
products, electrical appliances, textiles, electronics and telecommunications, building materials, furniture, office equipment, medical equipment, pharmaceuticals, steel and petrochemicals.
Fixed‑asset investment in 2015 was RMB105.5 billion, an increase of 17 per cent. Of
this, property investment was RMB48.1 billion, up 12 per cent; there were 331 property
projects each involving investment of more than RMB100 million. Sales of property totalled RMB61.35 billion, an increase of 32.2 per cent.
In 2015, foreign trade was US$35.6 billion, a fall of 3.7 per cent, with exports of US$28
billion rising 0.5 per cent; imports were down 16.4 per cent, to US$7.59 billion. Like the rest of China, Zhongshan suffered from slower growth in foreign trade.
During the year, contracted foreign investment was US$1.03 billion, up 16.4 per cent
from a year earlier, and actual foreign investment stood at US$457 million, down 32.9 per cent. Of utilised foreign investment, US$384 million, or 84.1 per cent, came from Hong Kong, Macao and the British Virgin Islands.
Tourism is an important industry in Zhongshan, although it is a less popular destination
than neighbouring Zhuhai. In 2015, the city had 9.87 million visitor arrivals, an increase of 9.4 per cent over 2014. Of these, 9.27 million were from the mainland and 595,200 from outside China. Total revenue from tourism was RMB22.7 billion, up 8 per cent.
RICE AND SILK TOWN Historically, Zhongshan was always prosperous. As early as 1,000 years ago, natural
silting and a man‑made encirclement of land for farming in the Xijiang Delta created
a plain that merged the three deltas of the tributaries of the Pearl River. Zhongshan –
ZHONGSHAN
Ancient pagoda in Zhongshan
then called Xiangshan – became a fertile plain for rice and for mulberry trees for the silk industry, as well as fruit and flowers. In the Qing Dynasty (1644‑1911), towns in
Zhongshan county developed to become part of a larger network of industrial and trading towns of the Delta.
The late 19th and early 20th century saw a great expansion of industry and agriculture
in the Pearl River Delta, when domestic and overseas trade flourished. There were large
waves of emigration from the region to the new continents of North America and Australia, with remittances pouring into native towns and villages. Zhongshan benefitted too, with its many natives living overseas.
During the first three decades of Communist rule, Zhongshan was an agricultural
region. Everything changed after the start of the open‑door policy of the early 1980s.
Zhongshan pursued a policy of import‑substitution, producing goods for the domestic market, by small and medium‑sized firms. Most of these companies were indigenous, and not foreign‑invested operations. There has been foreign investment but it has not
dominated industrial processing as it did in Shenzhen and Dongguan. Most foreign ‑invested production in Zhongshan has also targeted domestic consumer demand.
INDUSTRIAL CLUSTERS BECAME GLOBAL MANUFACTURERS The first wave of import substitution investment by local and foreign‑invested firms
was in electrical appliances and consumer electronics. Of the small household appliances
it produced, the most important were electric rice cookers and electric fans. The city
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ZHONGSHAN
soon produced the largest number of these items in the world. In addition, it made air conditioners. It has developed an original‑equipment‑manufacturer production base for a whole range of electrical appliances.
Zhongshan’s townships are famous for the mass production of different items – Dachong
for mahogany furniture; Dongfeng for electrical household appliances; Xiaolan for locks
hardware and acoustics products; Shaxi for casual wear; and Guzhen for lighting fixtures. The economy is dominated by township and village enterprises, as well as foreign‑invested
firms. Its most important industries are textiles, electronics, electrical machinery, chemicals and metal products.
Zhongshan is also home to many large private firms such as the Zhongshun Group, Vatti
and China Chant. Zhongshun is one of China’s leading paper‑makers and Vatti is a major manufacturer of cooking appliances.
In recent years, Zhongshan and its specialised industrial towns have been able to overcome
problems such as increasing competition in the domestic and international markets, rising
labour and production costs, shortages of skilled workers, and the need to comply with the mainland’s increasingly strict environmental requirements and regulations. It was hit by the financial tsunami of 2008, which pushed annual economic growth from double‑digit
to under 10 per cent, with export growth falling drastically to almost zero. But with its strong import substitution and a much more diversified industrial structure, Zhongshan has performed much better than Dongguan, which is dominated by industrial processing.
The Zhongshan government is encouraging the growth of new industries while
consolidating existing ones. It has identified shipbuilding, equipment manufacturing,
electronic and information technology, and LCD production as growth sectors, in addition to the existing ones of household appliances, lighting and furniture.
Zhongshan has built a good foundation for its industrial future. It is widely known as
“the third Italy of China” – meaning that it has a range of manufactured goods similar to those in Italy, that it is a centre of creativity and entrepreneurship. Many Italian and Japanese firms have invested in Zhongshan, where the quality of its skilled labour and entrepreneurship is rising very fast. It has a large metropolitan market of 40 million‑50
million consumers close to home, with a further 100 million people in a wider radius, in addition to its traditional export markets.
MASSIVE INVESTMENT IN TRANSPORT In January 2011, the first railway in Zhongshan’s history began operations. It runs
between Guangzhou and Zhuhai, with stops at Zhongshan. In 2013, a freight railway line
ZHONGSHAN
also opened between Guangzhou and Zhuhai, passing through Zhongshan. These two lines mean that, for the first time, the city is linked to the national rail network.
Another major transport project is the US$4.83 billion Shenzhen‑Zhongshan tunnel
‑and‑bridge corridor, which will link Zhongshan to economic heavyweight Shenzhen. This ambitious project took years of planning. The central government gave the go‑ahead only in
December 2015 for this project, which includes a 7‑kilometre tunnel and a 16.9‑kilometre
bridge. The transportation link will start from Shenzhen’s Bao’an International Airport, cutting travel time from Shenzhen to Zhongshan from the current two hours to less than 30 minutes. Analysts believe the project may draw as much as 40 per cent of the potential traffic away from the Hong Kong‑Zhuhai‑Macao Bridge when the corridor is completed
in 2021.
During the 13th Five‑Year Plan, the city will invest RMB100 billion in transport, a three
‑fold increase from the amount in the previous five years. It aims to become the “transport
hub of the western side of the Pearl River”, with a comprehensive development of roads, railways, inter‑city and intra‑city light railways and ports.
The port of Zhongshan is being moved eastwards to the new industrial zone of Cuiheng.
The cargo capacity will gradually increase over the long term from the current capacity of handling vessels of 2,000‑3,000 tonnes to vessels of 100,000 tonnes. In 2015, the port
of Zhongshan handled 73.25 million tonnes of cargo, down 5.7 per cent from 2014. The decline was due to China’s overall deteriorating export performance.
Zhongshan
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DEVELOPMENT ZONES The city is home to one state‑level development zone, which opened in March
1990. Covering an area of 17.1 square kilometres, the Zhongshan Torch High‑Tech
Industrial Development Zone hosts many companies in the automobile, auto parts,
biopharmaceuticals, packaging, electronic and information, chemical industries. According to its website in November 2016, it had a population of 230,000, with more
than 1,000 companies from over 20 countries and regions, including nearly 20 from the Fortune 500 list. In 2015, the zone’s output was RMB44.33 billion, up 8.6 per cent
over 2014, with per capita output of RMB181,500. Industrial output was RMB179.9 billion in 2015, up 6.4 per cent over the same period a year earlier. Its foreign trade
in 2015 was US$12.39 billion, down 7.8 per cent, with utilised foreign investment up 6.5 per cent to US$213 million.
In December 2013, Cuiheng, the village
where Sun Yat‑sen was born, was upgraded to become a special zone with a planned
area of 230 square kilometres. The first
phase of development will include an industrial park, an international trade
services platform, an education and training park, an international cultural exchange zone, and an area for promoting tourism. By 2020, the output of the zone is expected to reach RMB50 billion.
The Cuiheng zone is given the task of
accelerating
Zhongshan’s
cooperation
with Hong Kong, Macao and Taiwan. The
Zhongshan city government has signed several cooperation projects with Taiwan,
including the Zhongshan Cuiheng Macao Taiwan Economic and Trade Development
Centre Project, the Cuiheng Industrial Study and Research Base Project, and the Taiwan Straits Cultural Exchange Center.
In July 2014, Macao signed an agreement
Sun Yat‑sen’s Residence Memorial Museum, Zhongshan
ZHONGSHAN
with Zhongshan to jointly set up a five‑square‑kilometre cooperation pilot district in the
Cuiheng zone, aimed at small to medium‑sized Macao firms. They will be companies in the sectors of healthcare, housing, education, tourism and cultural facilities.
Under the 13th Five‑Year Plan, the Torch Development Zone and the Cuiheng New
Zone will be incorporated into a single unit together with Shaxi, Datong and Wuguishan Townships. By 2020, this enlarged district will have a GDP of RMB125 billion, a resident population of 800,000 and an economy heavily dependent on services.
By 2020, the Torch Development Zone and the Cuiheng New Zone will have a
combined GDP of RMB85 billion, with a resident population of 350,000 and production of high‑technology goods exceeding RMB220 billion.
INTEGRATION WITH GUANGZHOU METROPOLIS In the future, Zhongshan’s prosperity will be linked more closely to the railway system
being built in Guangdong that will bring major cities, including Zhongshan, within one
hour of the provincial capital of Guangzhou. The railway intensity of the Pearl River Delta
will be comparable to that of Greater Tokyo but at a lower travelling cost and a much larger territorial span. The network will create a one‑hour living zone for most of the
residents in the region. Zhongshan has expanded to the edge of the greater Guangzhou metropolis, with greater proximity and access to its consumer demand, social capital and
public services, while at the same time being able to maintain a lower land and living cost than its neighbours.
More human capital and services as well as residential housing demand have been and
will be flowing to Zhongshan from the Guangzhou‑Foshan metropolitan area, Hong Kong and Macao.
According to official figures, a residential apartment in Zhongshan in March 2016 cost
about RMB7,000 per square metre, a rise of 10 per cent‑15 per cent over the previous 12 months. That compares with RMB9,000 per square metre in Dongguan and RMB16,000 per square metre in Zhuhai, which borders Zhongshan.
Property agents expect prices in Zhongshan to rise 20‑30 per cent over the next three
years because of the loose monetary policy in the mainland and abroad, Beijing’s support
for the property market in second‑tier cities, and the completion of the bridge connecting Zhuhai to Hong Kong.
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HIGHLIGHTS OF ZHONGSHAN’S 13th FIVE‑YEAR PLAN (2016‑2020)
1.
Targets for 2020. By 2020, GDP is expected to reach RMB500 billion, with an annual average growth of about 7.5 per cent and the average per capita GDP reaching
RMB130,000. Labor productivity will rise 50 per cent from the 2015 level; the resident population will reach 3.65 million.
2.
Innovation. By 2020, spending on R & D will account for 2.9 per cent of GDP. The number of high‑tech companies will double during this five‑year period. Zhongshan
aims to rank first in Guangdong in innovation indices.
3.
Advanced manufacturing. By 2020, advanced manufacturing will account for 50 per cent of added value industrial output, output of strategic and new industries
will account for 20 per cent of GDP, and modern services will account for 60 per cent of the added value of services.
4.
Green city. Zhongshan will strive to reduce consumption of energy used in production, joining the ranks of the most low‑carbon cities in Guangdong Province.
Zhongshan will attain an average per capita space of green and parkland of 14.6 square meters. It will control annual average density of PM2.5 at about 33 micrograms per cubic metre.
5.
Southern District.
Zhongshan will transform its underdeveloped southern part
into one that complements the city centre. This will involve the modernisation
of Sanxiang and Tanzhou Townships. This area will serve Hong Kong, Macao and the Hengqin Free Trade Zone of Zhuhai. It will have strategic new industries, and a leisure and tourism area. This district will have improved transport links to the new Hong Kong‑Zhuhai ‑Macao Bridge, the main city area, and the Cuiheng New Zone. By 2020, the Southern District will have a GDP of RMB55 billion and a resident population of 480,000.
6.
Living standard. The income of urban and rural residents will increase at the same rate as the city’s GDP. The government will promote cultural industries, whose
added value will rise to 6.8 per cent of the city’s GDP by 2020.
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JIANGMEN
JIANGMEN
MIGRANT CITY GREW TO BE INDUSTRIAL LEADER
Jiangmen is a city with a history of over 600 years and a population of 4.5 million, on
the west side of the Pearl River, half way between Guangzhou and Zhuhai. In the 17th
century, Jiangmen became a trading centre in the Pearl River; in 1904, it was open to foreign trade. One legacy of this period is a historic waterfront district lined with buildings
in the treaty port style; the city has an ongoing renewal project which has restored many of these buildings. It is the birthplace of Liang Chichao (1873‑1929), one of the architects
of the failed Hundred Days of Reform initiated before the fall of the Qing Dynasty in 1911. Jiangmen has been the hometown of Chinese migrants around the world, with some
4 million living in over a hundred countries. They went to Southeast Asia, Australia and the Americas to work on farms, rubber and banana plantations and tin mines: to dig for
gold, iron ore and other metals. They also helped to construct the trans‑Pacific railroad. Emigration was especially heavy in the years before World War Two, when there were domestic turmoil and widespread poverty. to
Many migrants maintained close ties with their hometown, investing or donating money
their ancestral communities. Some returned and stayed, leaving a lasting legacy in
the form of fortified multi‑storey concrete towers, mainly in the district of Kaiping; these
“hanging houses”, as they are known, were named by UNESCO as a World Heritage Site in 2007. The first towers were built in the early Qing Dynasty (1644‑1911) and more towers
have been added over the succeeding centuries, using money from the migrants. They
were built as homes with Chinese and western architectural features, and were designed
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JIANGMEN
to protect the occupants from attacks by bandits. About 2,300 are still standing.
Jiangmen covers 9,504 square kilometres on the edge of the Pearl River, or about one
quarter of the land area of the delta region. It has 414.8 kilometres of coastline and
561 islands with a combined area of 250 square kilometres. Its relatively well‑preserved
environment and high ratio of green space have earned for it national awards as a highly habitable city.
STABLE ECONOMIC GROWTH In 2015, Jiangmen’s GDP was RMB224 billion, a year‑on‑year increase of 8.4 per cent, and
per capita GDP was RMB49,608. The added values of its primary (agriculture), secondary (manufacturing) and tertiary (service) sectors were RMB17.47 billion, RMB107.9 billion,
and RMB98.68 billion respectively, and have year‑on‑year increases of 3.6 per cent, 8.6
per cent and 8.8 per cent respectively. The proportion of the three sectors in the city’s GDP was 7.8 per cent, primary; 48.1 per cent, secondary; and 44.1 per cent, tertiary. In 2015, investment in fixed assets rose 17.7 per cent to RMB130.8 billion. Investment in
real estate was RMB31.1 billion, the same as a year ago. Retail sales rose 11.8 per cent to RMB103.2 billion.
In 2015, the city’s foreign trade was RMB123.2 billion, a fall of 1.6 per cent; imports
fell 14.7 per cent to RMB27.71 billion, and exports rose 3 per cent to RMB95.47 billion.
Contracted foreign investment fell 26 per cent to US$963 million; utilised foreign investment rose 3 per cent to US$879 million. During the year, the city earned RMB33.96
billion from tourism, an increase of 21.7 per cent. It received 15.48 million visitors, down 2.9 per cent.
Jiangmen’s economy developed slowly during the first three decades of rigid state
planning. Since 1978, Jiangmen has benefited from its advantageous geographic position on the Pearl River, close to Guangzhou. Jiangmen – which means “gate of the river” –
also benefited from the finance, technology and management of its emigrants and other overseas Chinese.
Jiangmen is primarily a manufacturing centre, part of China’s world‑famous “Factory of
the World”. Private firms and companies from Hong Kong, Macao, Taiwan and its overseas
migrants are the principal motors of the economy. Initially, its main products were textiles
and garments, foodstuffs, furniture, construction materials, metallic products, motor cycles, and domestic electric appliances. In the last decade, its economy has expanded into more technologically advanced industries, including biotechnology, electronic information, medical equipment, LED products, computers and office equipment.
JIANGMEN
New houses built in traditional Chinese style
By 2016, Jiangmen had attracted nearly 8,000 foreign enterprises, with an accumulated
investment amount of over US$46 billion utilised, according to recent official statistics. Among them are Mitsubishi Heavy Industries, Panasonic, Hyundai, Swiss ABB, BP, Hutchison Whampoa, Tesco, Metro, Emerson and Mondelz.
NEW GUANGHAI BAY ECONOMIC AREA To stimulate growth in “new normal” of slower economic growth, Jiangmen has
launched an ambitious plan to develop the area bordering its Guanghai Bay. In January 2014, Jiangmen published a 153‑page blueprint for the “Guangdong (Jiangmen) Large
Guanghai Bay Economic District” (2013‑2030). This new district is located in the south
of Jiangmen, covering an area of 3,240 square kilometres. The core 520 square‑kilometre
area is where Yinzhou Bay and Guanghai Bay are. By 2016, 5 per cent of the area had
been developed, where a group of large companies producing rail vehicle equipment are. Industries targeted for future development there include ocean engineering, modern manufacturing, and ecological business. In 2015, Jiangmen signed contracts for over 40
projects involving pledged investment of RMB22.6 billion to operate in this bay area. By 2020, the new district is expected to generate a GDP of RMB120 billion, from an estimated RMB73 billion in 2017.
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JIANGMEN
Jiangmen has one state‑level industrial zone, the Jiangmen High and New Technology
Industry Development Zone. Set up in July 1992 with an area of 47.1 square kilometres in southeast part of the city, it specialises in three major sectors – photo‑electric technology, electronic and information technology, and bio ‑technology. In November 2015, the
State Council designated it as a Pearl River Delta (Jiangmen) National Major Innovation Demonstration District. With this upgrade, the zone will establish a national laboratory for semi‑conductor and photoelectric products, 12 provincial‑level engineering and technology
research centres, and 129 technology companies. The zone has set aside 100,000 square metres for incubators and accelerators; this will be expanded to one million square metres by 2020. By end‑2018, the zone’s output is expected to reach RMB100 billion.
Another development zone is the Jiangmen Industrial Transfer Park, which covers an
area of 138 square kilometres. By 2016, a total of RMB1.44 billion had been invested in its infrastructure. It has three sections: in Kaiping, the zone focuses on the development
of high‑end equipment manufacturing and new fibre materials; in Enping, the focus is on
electronic and information technology; the Taishan section focuses on developing nuclear power equipment and advanced manufacturing of auto parts.
A third zone is the Jiangsha Advanced Manufacturing Demonstration Park, inside
the Binjiang (Riverside) New City. It has a planned area of 9.53 square kilometres and focuses on the development of high‑end precision electronics, health food, motor cycles, auto parts, new energy and new materials. By mid‑2016, it had attracted more than 60 foreign‑funded companies and over 90 domestic ones; of these, more than 30 had each
made an investment of over RMB100 million. It is the centre of motor cycle production in Guangdong, with an annual output capacity of 4 million units. By 2020, the park is expected to achieve an industrial output value of over RMB100 billion.
Then, there is the Xinhui Economic Development Zone, which has been designated
for private technology companies under the auspices of the Ministry of Science and Technology. It has over 360 foreign‑funded firms and domestic private companies. They
are in the sectors of power equipment, optical instruments, information industry, fine chemicals, textiles and clothing, steel smelting, and stainless steel.
FAST‑EXPANDING RAIL EQUIPMENT INDUSTRY Another major industrial zone is the Guangdong Rail Transportation Equipment
Industrial Park, which is designed as a base for the making and repairing of railway equipment and supporting industries. The park, in the Xinhui district, covers 87 hectares;
this will increase to 440 hectares. It can manufacture self‑propelled train carriages that run
JIANGMEN
on speeds of 140‑, 160‑ and 200‑kilometres per hour. The major investor is China Railway
Rolling Stock Corporation (CRRC), whose parent is the state railway giant, CRRC, and the world’s largest supplier of rail transit equipment.
In June 2013, this Jiangmen industrial park was designated as the main base in south
China for the manufacturing and repair of railway equipment. So far, it has attracted RMB3.6 billion in investment, from investors such as Siemens, Jiangmen Zhongche Railway Vehicles Equipment Company, Grand Tech Group and Guangdong Nan Ou. The
park is Jiangmen’s springboard to a host of railway‑related industries undergoing rapid growth propelled by the country’s expanding high‑speed train network. It is expected to generate an output of RMB50 billion or more by 2020.
The Taishan Clean Energy (Nuclear Power) Equipment Industrial Park makes machinery
and equipment for the nuclear industry. The Advanced Manufacturing Base Jiangshan Demonstration Zone is designated for makers of autos and motorcycles, food, new energy and new materials.
IMPROVED TRANSPORT AND SLUGGISH PROPERTY PRICES Jiangmen forms part of a rapidly growing transport network to transform the Delta
region into a great metropolitan area with all major cities within an one‑hour drive of
Guangzhou, the provincial capital.
Since 2011, Jiangmen has been on the route of a passenger train between Guangzhou
and Zhuhai. Another new route is under construction – a high ‑speed train between
Shenzhen and Maoming in the south of Guangdong, which passes through Jiangmen.
Work on the route began in June 2014 and is due to be completed in October 2017; it covers 387 kilometres and costs an estimated RMB59.3 billion. It will be the first high
‑speed rail connection in western Guangdong and it will cut the travel time from Shenzhen to Maoming from seven to three hours. Official estimates say that the Jiangmen‑Maoming
section will be able to handle 10.53 million passengers a year by 2025, and 22 million by 2035.
In 2015, a new bridge connecting Jiangmen with Shunde opened, cutting travelling
time between the two cities from one hour to 20 minutes. The 2,250‑metre, six‑lane bridge
is part of an expressway linking Guangzhou, Foshan and Jiangmen. Another important
project is the 123‑kilometre, RMB24 billion-Jiangmen Avenue, an expressway without traffic lights connecting the Guangzhou‑Foshan region at one end and the Hong Kong
‑Zhuhai‑Macao bridge at the other. It will connect the most economically advanced areas of Jiangmen – Pengjiang, Jianghai, Xinhui and Heshan.
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JIANGMEN
Kaiping Diaolou, Jiangmen
2015 was a mixed year for Jiangmen’s property market, with weak demand and a
glut of supply. Total investment fell 0.6 per cent to RMB31.1 billion and the area of completed commercial property fell 29 per cent to RMB28.79 billion. But the area sold
rose 40 per cent to 5.05 million square metres, an increase of 33.8 per cent in value
terms to RMB28.70 billion. Among the buyers were residents of nearby cities; they found
Jiangmen much cheaper than those in their city and that the city’s improved rail and road connections meant that they could commute to work from Jiangmen. In May 2016, the average price of a new apartment in Jiangmen was RMB5,971 a square metre and that of a second‑hand one RMB5,001, according to the city’s official figures.
JIANGMEN
HIGHLIGHTS OF JIANGMEN’S 13th FIVE‑YEAR PLAN (2016‑2020)
1.
Targets for 2020. Jiangmen’s GDP will rise an annual average of 9 per cent from RMB224 billion in 2015. The proportion of R & D in the city’s GDP will reach 3 per cent,
up from 1.9 per cent in 2015; the number of patents will rise to 6.6 for every 10,000 people, up from 5.35 in 2015. The resident population will rise by 1 per cent from 4.5 million in 2015; the average disposable income of residents will rise by an average annual 9 per cent, RMB22,364 in 2015 to RMB34,300 in 2020.
2.
Five major industrial clusters. Jiangmen has identified five sectors for strategic development – rail vehicle equipment; auto and auto parts industry; new
materials and new energy industry; education equipment; and “health” industry (food, pharmaceuticals and health products).
3.
Improve manufacturing. Jiangmen aims to develop advanced manufacturing, to reach an output of RMB330 billion by 2020, an annual average growth rate of 18.5
per cent between 2017‑2020. It will raise the technological level of its traditional industries – electrical machinery, textiles and garments, electronics and IT, foodstuffs, building materials, and paper‑making.
4.
Tourism. Jiangmen aims to develop specialty tourism, promoting its major historical and cultural sites, including the “hanging houses” in Kaiping, and a yachting
holiday resort in Yinhu lake. By 2020, it aims to attract more than 30 million visitors annually, with tourist revenue increasing by more than 18 per cent a year.
5.
Transport hub. Jiangmen aims to be a transport hub in the western Pearl River Delta. By 2020, the city will handle 140 million passengers and 190 million tonnes
of cargo; its port will handle 85 million tonnes of freight. It will have a network of trains, light rail and intra‑city rail of about 335 kilometres, and a road network of about 12,500 kilometres, including 600 kilometres of expressways.
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ZHUHAI
ZHUHAI
GARDEN CITY TO BE GREENER AND INNOVATIVE
Zhuhai was the smallest Special Economic Zone set up by the Chinese government at
the start of the open‑door policy. It is small but strategically located, and hence has served indispensable geo‑political and geo‑economic functions for the government. Its small size,
however, also led to less policy attention and resources from the central and provincial governments.
Zhuhai was set up as a county in 1953, hived off from Zhongshan County, which had been
known as Xiangshan County for almost 1,000 years. In terms of land area, Zhuhai is the smallest city in Guangdong Province at 1,724 square kilometres, compared to Zhongshan’s 1,784 square kilometres and Shenzhen’s 1,997 square kilometres. When the SEZ started in
1980, the whole city had a population of only 365,000 and a local GDP of RMB261 million; the per capita GDP of RMB715 was lower than the average level of the Pearl River Delta
region. In the 35 years since then, the city’s GDP grew to RMB202.5 billion in 2015, with a per capita GDP of RMB124,700; this qualifies the city as an upper‑middle‑income economy
by world standards and ranks the city among the richest in China.
Under the 13th Five‑Year Plan (2016‑2020), Zhuhai will strive to be greener, more
affluent and more innovative; it aims to retain its long‑standing reputation as the most
environmental friendly city to live in China. The SEZ’s economic growth will be boosted by two main developments: the completion of the Hong Kong‑Zhuhai‑Macao Bridge and
the free trade zone of Hengqin. Both mega projects will integrate this “Garden City” closer with the rest of the PRD region.
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ZHUHAI
Zhuhai also aims to contribute to the national One Belt One Road initiative, by leveraging
its traditional strengths in trade, logistics, tourism and equipment manufacturing. In
particular, its deep ‑water Gaolan Port, situated strategically in the Xijiang ‑Zhujiang waterway in southern China, is expected to play a bigger role under this new Silk Road trade plan.
MANUFACTURING AND SERVICES At the end of 2015, Zhuhai had a resident population of 1.63 million people. In 2015,
Zhuhai’s manufacturing sector accounted for 49.7 per cent of GDP, the service sector 48 per cent, and agriculture 2.3 per cent. The per capita GDP was RMB124,700, an increase
of 8.5 per cent over the same period. Foreign trade was RMB296 billion, a fall of 12.3 per cent. In 2015, exports rose 0.6 per cent to RMB179.33 billion, and imports fell 26.7
per cent to RMB116.7 billion. Fixed‑asset investment was RMB130.5 billion and retail
sales RMB65.3 billion.
In manufacturing, it has six “pillar industries” – electronic and information
technology, biotechnology, electrical appliances, electric power, petrochemicals, and
precision machinery. In 2015, the industrial output added value was RMB100.6 billion, an increase of 10.2 per cent over 2014; the added value of these six pillar industries rose 9.6 per cent.
Zhuhai is a world leader in the materials used by the printing industry. Once a year,
in October, it hosts the Remax World Expo, the largest annual event for the computer printing industry. The city has more than 600 printer manufacturers who make re
‑manufactured inkjet cartridges, toner cartridges and ribbons, and cartridge components, including ink, toner, chips, drums, rollers and blades.
Zhuhai is one of China’s largest manufacturers of yachts and has a major yachting
centre. Its yacht industry has an annual output of more than RMB2 billion. Formerly
focused on exports, the makers are increasingly looking at the domestic market with the growing number of wealthy Chinese. The city boasts a Club Med on one of its many islands offering a wide range of water sports.
The city’s most famous company is Gree Electrical Appliances, the world’s biggest
manufacturer of air conditioners. In 2015, it earned RMB83.7 billion from the sales of air conditioners, down nearly 30 per cent year‑on‑year because of weaker exports.
To offset this decline in its core product, the firm is diversifying into real estate, smart phones, clean‑energy cars, and other sectors.
ZHUHAI
Zhuhai International Convention and Exhibition Centre, Zhuhai
LIMITED FOREIGN INVESTMENT Compared to Shenzhen across the Pearl River, Zhuhai has had limited success in
attracting foreign investors due to its small population and, until 2013, lack of a railway.
In 2015, the city approved 651 foreign investment projects, with a contracted value
of US$3.62 billion, a year‑on‑year increase of 20.7 per cent, and actual investment of
US$2.18 billion, up 12.8 per cent. Of the actual foreign investment, construction accounted for 30.4 per cent, manufacturing 29 per cent, property 18.7 per cent, and wholesale and retail businesses 6.9 per cent.
Major foreign investors in Zhuhai include Fluor Corp, the U.S. engineering and
construction conglomerate; Wartsila, a Finnish company in marine engineering; and European giants, such as BP, Shell, Bosch, Philips, Schneider and ABB.
Zhuhai has 146 islands and 690 kilometres of coastline, one of the longest of any city in
China. This attractive setting drew 31.2 million domestic tourists and 4.1 million outside visitors in 2015, most from Hong Kong, Macao and Taiwan.
The main urban area is Xiangzhou, which accounts for half the population. The two
main suburban districts are Doumen and Jinwan.
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HENGQIN GROWING FAST The fastest growing area of Zhuhai
is Hengqin, an island of 106 square kilometres that is the closest part of the city to Macao. It has been selected to be
one of the three areas of Guangdong’s Pilot Free Trade Zone (the two others are
Qianhai‑Shekou in Shenzhen, and Nansha in Guangzhou). From a virgin island with just 4,000 inhabitants, Henqqin has
grown dramatically, with skyscrapers, luxury hotels and new roads being built
in recent years. According to the official Zhuhai Daily, its GDP in 2015 was RMB8.7 billion, an increase of 28 per cent
over 2014; fixed‑asset investment was RMB28.8 billion, an increase of 16.69 per
cent, and actual foreign investment rose 66 per cent to US$426 million.
Completed projects include the new
campus of the University of Macau, on an area of 1.1 square kilometres, and the
RMB20 billion ‑Chimelong International Ocean
Resort.
The
132 ‑hectare
site
Shizimen St. Regis Hotel and Office Tower, Zhuhai
contains the world’s largest aquarium. There are also upmarket commercial apartment
buildings, aimed in part at residents of Macao, who can cross the border 24 hours a day; an international convention and exhibition centre; and a financial district where major Chinese banks have opened branches.
According to the Zhuhai Daily, 1,770 financial companies had registered in Hengqin
by mid‑2016, with a contracted capital of RMB183 billion and RMB1.5 trillion under
management. In May 2015, a rare precious metals and commodities exchange opened there. The master plan calls for areas dedicated to leisure and tourism, high‑class resorts,
and high‑tech industry. Property prices in Hengqin are the highest in Zhuhai, even though the number of full‑time residents is small. This is because of the inflow of capital, much of it is speculative and from other parts of China.
ZHUHAI
Hengqin is implementing the Closer Economic Partnership Agreement made between
Guangdong and Macao. The agreement includes 11 specific measures to help Macao
companies access the mainland market. Each month the two sides meet to assess the progress in their cooperation, with representatives from the Hengqin New Area Administration, the Macao Trade and Investment Promotion Institute, and the Central Government Liaison Office in Macao.
These cooperation projects include the Guangdong ‑Macao Chinese Traditional
Medicine Technology Industrial Park and the Macao New Street. The latter will be an area
of retirement homes, apartments, hospitals, and educational facilities aimed at Macao people working and living in Hengqin. In addition, 32 Macao companies had taken space in a commercial incubator centre in Hengqin as of mid‑2016.
MAJOR INFRASTRUCTURE PROJECTS Another major project that will transform Zhuhai is a bridge that will link it to Hong
Kong and Macao, the first to connect Hong Kong to the western bank of the Pearl River. On completion, it will become the longest sea bridge in the world, at 50 kilometres long. It was
due for completion in 2016 but engineering complications have pushed this back to 2017 at the earliest. It requires construction of four man‑made islands to connect the two ends of the
bridge and to handle border crossings at each end. Zhuhai expects the bridge will bring more visitors and business as commuting time to and from the city will be significantly reduced.
In 2015, the city’s ports, including Gaolan, handled 112 million tonnes of cargo and
1.34 million containers, up 4.7 per cent and 13.7 per cent respectively over a year earlier. The city’s airport, which opened in June 1995, is 35 kilometres both from Macao and
from the urban centre of Zhuhai. It was built on the site of a military airbase constructed by the Japanese in December 1941 when it attacked Hong Kong. It has the capacity to
handle 12 million visitors and 600,000 tons of cargo annually. It is the least used airport in the PRD region. In 2015, it handled 4.7 million passengers, compared to 60 million
each in Hong Kong and Guangzhou. The Hong Kong Airport Authority owns a 55 per cent stake in the airport.
As from January 2017, high‑speed trains have been running each week from Zhuhai to
Shanghai, Guiyang and Changsha, in addition to those to Beijing and Guilin, which began at the end of 2015. They make it more convenient for visitors from these cities to visit Macao and Zhuhai, and vice versa.
The services to Changsha and Guiyang are running every day and that to Shanghai four
times a week. The journey times are four, seven and 13 hours respectively.
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EDUCATION AND CULTURE One of the most far‑sighted ideas of Liang Guangda, mayor for 16 years in the 1980s and
1990s, was to develop Zhuhai as an education centre. He offered free land to universities
around China to build campuses in Zhuhai. A dozen accepted his offer, including Jinan University in Guangzhou, Sun Yat ‑sen University in Guangzhou, Harbin Industrial University, Beijing Science and Technology University, and Beijing Normal University. Beijing Normal University then established United International College, a joint venture with Baptist University of Hong Kong. It was the first such joint venture college between a mainland and a Hong Kong institution.
The latest university in Zhuhai is the new campus of the University of Macao, the oldest
higher education institution in Macao. In July 2013, it began a move to a spacious new
site 20 times the size of its previous campus. It is located on Hengqin, a stone’s throw from Taipa in Macao.
One project that further boosts the image of Zhuhai as a “city of culture” is the RMB1.72
billion Opera House. Built on reclaimed land on Yeli Island opposite the city’s main seafront, this landmark is designed as two shells – one large at 90 metres high and one small at 60 metres high. It will have a concert hall with 1,550 seats, plus a lobby, an auditorium and a
stage; this venue will host large‑scale performances, such as symphonies, chamber music, opera, ballet, musicals and theatre. It is due to open in the last quarter of 2017.
Another addition is the Zhuhai Museum and Urban Planning Exhibition Hall, on the
main seafront. It has a floor area of 55,807 square metres and is nearing completion. Officials have given no date for the opening of what will be another major cultural and
tourist attraction of Zhuhai. On the drawing board is the Xiangzhou Cultural Centre, in the heart of the city, with a floor area of 50,000 square metres.
BOOMING PROPERTY MARKET Property is an important driver of the Zhuhai economy. According to official figures,
investment in real estate in 2015 was RMB52.4 billion, a year‑on‑year increase of 35 per
cent. Of this, investment in commercial apartments was RMB38.5 billion, up 44 per cent, with the highest increase in villas and upmarket apartments of more than 144 square metres each. Like other cities in China, Zhuhai has a large number of apartments that are sold but
unoccupied. Many of the buyers are speculators from other parts of the mainland. The most expensive prices were in Hengqin, where some properties cost as much as RMB40,000 per square metre, compared to about RMB10,000 in urban areas in mid‑2016.
ZHUHAI
Much of Zhuhai’s attraction is its well‑preserved environment with a scenic promenade,
tree ‑lined boulevards, and spacious parks. In 2014, the Chinese Academy of Social
Sciences ranked Zhuhai as the most pleasant city in China to live in, ahead of Hong Kong and Haikou.
Zhuhai is working hard to keep the city green. It plans to triple the length of the
shorefront road, now 18 kilometres, to 55 kilometres, making it one of the longest such
roads in the world. It will have nearly 20,000 free bicycles available for leasing at nearly 200 points close to bus stops in the Gongbei, Jida and Xiangzhou Districts. It will introduce
“clean” buses, using Liquefied Natural Gas or electricity. This began in October 2010; the aim is to phase out all the buses using gasoline completely.
CONTRIBUTING TO BELT‑ROAD MISSION In line with the national strategy of One Belt, One Road, the city is striving to become
“a strategic point” in the modern Maritime Silk Road.
Historically, Zhuhai was not part of the Silk Road, but, under a much ‑expanded
definition of the Belt‑Road initiative, the city will promote it in several ways. First is the
upgrading of its Gaolan Port, to meet the new challenge of a Belt‑Road economic corridor in Southern Asia. It will take part in the cooperation projects in Pakistan’s Gwador Port
and free trade zone; and it will promote the direct sea route between its Gaolan Port and Brazil’s Vitoria Port. It will enter alliances with sea ports and airports on the One Belt,
One Road routes. The city will also build an open financial platform and take part in the Guangdong Silk Road Fund; this fund aims to support Guangdong firms investing in countries that are on the Belt‑Road routes.
Zhuhai will also help to develop the Guangzhou‑Hong Kong‑Macao Great Bay Area
into a world‑class cluster of cities, another new idea for making full use of the Belt‑Road
strategy to stimulate regional growth. Zhuhai will be able to contribute more to this grand scheme with the completion of the Hong Kong‑Zhuhai‑Macao Bridge and when Hengqin starts to operate fully as a free trade zone.
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HIGHLIGHTS OF ZHUHAI’S 13th FIVE‑YEAR PLAN (2016‑2020)
1.
Targets for 2020. By 2020, Zhuhai’s GDP is expected to reach RMB300 billion, an increase of 50 per cent over RMB200 billion in 2015, with an average annual growth
of 9 per cent. Per capita GDP will grow to US$30,000. High‑technology goods will account
for about 60 per cent of large‑scale entreprises industrial output and R & D spending will exceed 4 per cent of GDP. National‑level high‑tech companies will number more than 800 and there will be 25 patents per 10,000 people.
2.
Targets for the 2015‑2017 period. Spending on R & D will reach RMB7.5 billion, and space for incubators will increase to one million square metres, with 500 such
companies. The number of major firms with revenue of more than RMB10 billion will reach 18, and the number of companies listed at home and abroad will reach 100.
3.
Urban Development. Zhuhai will develop a “Western Environmental New Area” on the western side of the Pearl River facing the South China Sea. It will include the
Jinwan and Doumen districts, with a core area of 165.6 square kilometres. Key projects there include the upgrading and beautification of Xiti Road, a light rail system connecting the urban area of Zhuhai with the city’s airport, a tram system and a western extension of the Hong Kong‑Zhuhai‑Macao Bridge. By 2020, the district will begin to take shape as “a
model new city” with a population of approximately one million.
4.
Develop modern industries. In accordance with the China Manufacturing 2025 plan, Zhuhai will develop intelligent production, using robots and intelligent homes,
create the Gree International Intelligent Manufacturing Park, the National Robot Science Park, and the Yunzhou Intelligent Unmanned Ship Production Base. Other priority projects are shipbuilding, ocean engineering, aviation and aeronautics, and tram transport. An equipment manufacturing belt is to be developed near the Gaolan Port, developing into an industry cluster with an annual output of RMB100 billion‑ RMB200 billion. It will
also develop industrial services such as third‑party logistics, inspection and certification, service contracting, leasing and other financial services.
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ZHAOQING
FROM ANCIENT TIMES TO MODERN SILK ROAD
Zhaoqing is an ancient city, rich in history and with a beautiful natural landscape. Set
up as an administrative entity 2,200 years ago, it was China’s earliest contact point for
the maritime and overland Silk Roads several centuries ago. But its eminence as a trading centre later faded with the rise of other cities. It has attracted limited investment, due to its relatively remote geographical location and lack of preferential policies for investors.
In recent years, this ancient city has greatly improved its transport links with the rest
of the Pearl River Delta region, which has brought new business opportunities. It is now
a major stop for the region’s high‑speed trains, inter‑city railways and expressways. Since
2012, it has been busy developing a new business area called Zhaoqing New District, with
which the city hopes to attract advanced, high‑tech, and green industrial and commercial investment.
The city has a diversified industrial structure, with three “new pillars” – electronic and
information technology, machinery, oil refining and petrochemicals; and four “traditional
pillars” – construction materials, paper making, pharmaceuticals and auto parts. Zhaoqing’s biggest industrial firms include Guangdong Zhaoqing Blue Ribbon Group, Star Lake Bioscience and Guangdong Hongtu Technology Holdings. The Blue Ribbon Group is a national beer producer with its headquarters in Zhaoqing.
Zhaoqing’s latest role, designated by the central government, is to be the Delta’s gateway
to the southwest hinterland. It also is to link up with neighbouring Guangzhou and Foshan to form a regional urban bloc and achieve a greater scale of economy. This so‑called
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Street scene of Zhaoqing
“one‑hour living circle” aims to have residents of these three cities live, work and play anywhere easily in a greatly expanded metropolitan area.
At end‑2015, Zhaoqing had a resident population was 4.06 million and a land area of
15,056 square kilometres. In 2015, the GDP of Zhaoqing was RMB197 billion, up 8.2 per cent over 2014. Output of the primary sector rose 4.4 per cent to RMB28.88 billion; that of
industrial added value rose 8.5 per cent to RMB96.9 billion, and that of the service sector
climbed 9.2 per cent to RMB71.22 billion. Retail sales rose 12.9 per cent to RMB63.24 billion while fixed‑asset investment rose 16.8 per cent to RMB133 billion. Contracted
foreign direct investment increased 4.6 per cent to US$3.49 billion, and utilised FDI rose
by the same amount to US$1.40 billion. Foreign trade increased 4.8 per cent to US$8.2 billion; exports and imports rose 3.5 per cent and 6.7 per cent respectively, to US$4.8 billion and US$3.44 billion
GOLDEN AGE Zhaoqing (meaning “the beginning of good luck and happiness”) was once the site of
the provincial governorship of Guangxi and Guangdong – a top administrative position it
held for almost 200 years from the 16th to the 18th centuries. An inland water navigation
ZHAOQING
system linked Zhaoqing at the Xijiang (West River) to national waterways in neighbouring
provinces. For thousands of years, its prosperous agrarian and craft economies specialised in stationery, textiles, sugar and handicrafts.
Zhaoqing was where the legendary Jesuit priest Matteo Ricci published the first map of
the world in Chineset, called the Impossible Black Tulip, in 1584. Together with another Jesuit, Michele Ruggieri, Ricci compiled a Portuguese‑Chinese dictionary, the first in any
European language, while in Zhaoqing. In 1582, Portugal signed an agreement with China in Zhaoqing to set up a trading post in Macao.
Over the centuries that followed, however, Guangzhou became the centre of south
China while Zhaoqing went into decline. Even with the advent of the open‑door policy in 1978, Zhaoqing still lagged behind.
The Delta’s industralisation drive was prompted by the relocation of industrial
processing manufacturing from Hong Kong. This made Shenzhen, Dongguan, and parts of
Guangzhou the “world’s factory” for labour‑intensive products, although there was not a significant industrial spillover to peripheral Zhaoqing.
ZHAOQING INDUSTRIALISES Since 2003, Zhaoqing has pursued its own industrialisation, developing an indigenous
heavy industry without relying on industrial processing that was dominated by foreign
investors. The move turned out to be a mixed blessing. Heavy industry replaced light
industry as the engine of growth of the local economy, but it was achieved by excessive investment – the ratio of fixed‑asset investment to GDP has reached over 50 per cent since
2003, with that of individual counties over 90 per cent in some years.
This led to problems of heavy corporate and local debt, inefficiency, and environmental
pollution from the newly established heavy industries – cement, ferrous and non‑ferrous
metallurgy, chemicals, and construction materials. The area’s traditional light industries
were squeezed out by a lack of investment and declining competitiveness. The city economy was thus increasingly trapped by inefficient small heavy industries that were unable to innovate and upgrade on their own.
Still, Zhaoqing has made headway in finding its niche in the Delta’s industrial system,
with auto parts being one example. Zhaoqing is a satellite city of Guangzhou and naturally benefitted when the provincial capital became a major centre of auto production.
In 2014, the city had 14 large‑scale auto parts manufacturers, with a combined industrial
output of RMB10.04 billion. The Gaoyao District is the centre of auto parts manufacturing in Zhaoqing, thanks to the area’s proximity to major car makers such as Volkswagen,
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Audi, and Mercedes‑Benz. From Gaoyao to Volkswagen’s production plant in Foshan is a journey of just 20 minutes by car. There are also more than 100 auto sales centres within a radius of six kilometres of Gaoyao.
Zhaoqing has also started to attract vehicle manufacturers. In March 2014, Guangdong
Baolong Automobile set up a factory in the city’s High‑Tech Zone. It specialises in the
manufacture of bullet‑proof cars. In 2010, Guangdong Marshell Electric Vehicle Company set up a production base in the High‑Tech Zone, where it makes electricity‑powered
vehicles, such as golf carts.
In October 2012, Zhaoqing announced its 2012‑2030 plan to develop a new business
area, called the New District, to be “an important engine to help Zhaoqing transform and upgrade” its economy, according to the city government’s website. The 115‑square‑kilometre
zone, on the eastern side of city, is to be the “new core, new landmark” and is designated to be “a major development platform of the Guangdong Province,” the website said.
There will be six core industries: energy preservation and environmental protection,
creative and cultural industries, leisure and health, modern logistics, trade fairs and conferences, and scientific and educational services. Infrastructure work is currently
under way. In 2016, the water‑supply system was upgraded. By 2017, the main roads and public facilities will be completed.
A few major companies have committed to setting up shop in this zone. Tus‑Holdings
Company Limited is to build a RMB‑10 billion Tus Science and Technology City, a regional
base with an environmental research institute. Affiliated to the Tsinghua University, Tus‑Holdings owns the world’s largest single university science park in the world – the 770,000‑square‑metre Tus Park in Beijing. Also, www.9914.com, the country’s third‑largest
B2B e‑commerce company, is building an e‑ctommerce platform in the New District.
Zhaoqing also has a 98‑square‑kilometre industrial park, the High‑Technology Industrial
Development Zone, which was set up in 1998 and officially elevated to state‑level status in 2010. At the last count, 600 companies have committed to invest there, of which 200 are
already in operation. These include China Resources, Baolong Motors, Hepu Power, and
Hyundai of South Korea. By 2020, this district is expected to have an industrial output of RMB200 billion, generated by industries such as electronics and information technology, metallurgy, biopharmaceuticals, and new materials.
NEW HOPE FROM BELT AND ROAD China’s launch of the One Belt, One Road initiative provides a new timely direction for
this historical Silk Road hub. In September 2015, Zhaoqing became a founding member of
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the United Nations Maritime‑Continental Silk Road Cities Alliance. Since then, Zhaoqing has been sending trade delegations to neighbouring countries to attract investment and talent under the new Belt‑Road framework.
Agriculture is another new source of growth. In Guangdong’s regional development
plan, Zhaoqing has been designated to be the major supply base for the Guangzhou ‑Foshan metropolis. Zhaoqing has more land and a less polluted environment for farming
than the highly industrialized cities nearby. Aware of such potential, major agricultural companies havte invested in Zhaoqing. The China Good Agri‑Products Development and
Service Association is planning to set up an exchange centre in the New District, for the exhibition, wholesaling and other transactions of agricultural products. Zhaoqing’s main farm products include rice, tea, sugar cane, fruit, vegetables, poultry and medicinal herbs.
TRANSPORT BREAKTHROUGH Zhaoqing has made great strides in integrating its transport system with that of the
PRD region and beyond. In December 2014, two high‑speed railway lines – Guiyang
to Guangzhou, and Nanning to Guangzhou – began operation, both passing through
Zhaoqing. In March 2015, the 112.9‑kilometre Guangzhou‑Foshan‑Zhaoqing Intercity
Guangzhou‑Foshan‑Zhaoqing Intercity Railway
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Railway started running; this is part of the PRD’s rapid transit network. Also completed were an expressway from the city to Guangzhou and another circular route around the
Delta. Under construction are expressways from Zhaoqing to Guangzhou via Foshan, and another from Shantou to Kunming and Zhanjiang. There is also a 171‑kilometre “golden
waterway” under construction, which will expand the freight capacity of the Xijiang River.
Zhaoqing does not have its own airport. Travellers use the province’s main airport in Guangzhou, less than 100 kilometres away.
Zhaoqing is popular for short holidays, especially for city people from Guangzhou,
Foshan and Shenzhen. Its main tourist attraction is the Seven‑Star Crags, which has limestone caves and cliffs inscribed with poems of a century ago. By train and by car, it is
about a one‑hour ride from these neighbouring cities. Its mountainous areas are a magnet for city dwellers searching for nature and cleaner air. In 2016, Zhaoqing held its first major
running marathon, attracting a large number of visitors to the city. In 2015, Zhaoqing had 495,700 tourist arrivals from outside the mainland, mainly from Hong Kong, Macao
and Taiwan. Tourism revenue amounted to RMB24.16 billion, up 9.3 per cent from 2014.
EMPTY PROPERTY Like many Chinese cities, Zhaoqing faces the problem of an excess supply of property.
Of Guangdong’s 21 cities, Zhaoqing ranks seventh in terms of the severity of this problem, according to www.Southcn.com. In June 2016, Zhaoqing announced a plan to reduce the inventory from 7.66 million square metres of empty space at end‑2015 to 7.26 million
square metres by end‑2018.
The plan includes 21 specific measures, such as encouraging rural workers to move
into the city and buy apartments, promoting development of the rental market, offering
subsidies and tax incentives for the purchase of property, and relaxing the restrictions on using pension funds to buy homes.
In 2014 and 2015, total sales each year were about 4.9 million square metres, with
not much increase. Demand has not risen because Zhaoqing’s population is small, with
not many new migrants. Workers going to urban areas to work and settle are a large potential market for low‑price housing, but many cities compete for the same group of
home‑buyers. Zhaoqing is not an attractive destination because its public amenities and other social services have not improved as much as those of other cities.
Despite the large excess of supply, prices are not falling. In May 2016, the average sales
price in the city was RMB5,653 per square metre, up 5.7 per cent from a month earlier. The price of units in one luxury estate even rose a year‑on‑year 27 per cent.
ZHAOQING
HIGHLIGHTS OF ZHAOQING’S 13th FIVE‑YEAR PLAN (2016‑2020)
1.
Targets for 2020. Zhaoqing aims to have an annual average GDP growth of 10 per cent, rising to around RMB300 billion in 2020; per capita GDP is expected to grow 9
per cent annually to RMB73,000. Its industrial added value, fixed‑asset investment, retail sales and the disposable income of residents will have annual average growth rates of 11.5 per cent, 18 per cent, 10.5 per cent and 9 per cent respectively.
2.
Standard of living. By 2020, the average gross income of peasants is expected to rise to RMB20,000 or more. The population is targeted to rise to 4.5 million, with 2.2
million people living in urban areas. Each resident is to have living space of not less than 30 square metres.
3.
Promote the One Belt, One Road initiative. Zhaoqing will speed up the construction of major transport links to ASEAN countries and perhaps to Central Asia eventually.
It will make use of major trade platforms, such as the Canton Trade Fair, to encourage countries along the One Belt, One Road route to invest in Zhaoqing. It will actively take part in ASEAN’s specialised markets of agricultural products, auto parts, metals and construction products.
4.
New District. Zhaoging will accelerate the construction of its New District to become a modern, high‑tech economic zone. By 2020, the initial stage of the District’s main
commercial area near the city’s East Station will be completed.
5.
Environmental protection. Zhaoqing will favour production units that use less energy, water and land. It strives to be the leader in Guangdong in the control of
polluting emissions. The water quality of the Xijiang River will be improved.
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BIOGRAPHY
AUTHORS Dr. Thomas Chan was Head of China Business Centre of the Polytechnic University of Hong Kong from 1992 to 2016. Chan has served as a consultant to the World Bank (1992) and as a Hong Kong affairs adviser to the Chinese government (1994‑1997). He has been a member of the Central Policy Unit Panel on Pan‑Pearl River Delta (Pan‑PRD) and an Associate member of the Central Policy Unit (2013‑2015). He served as an expert Advisor to the Hong Kong 2030: Planning Vision and Strategy of the Planning Department, the HKSAR Government. He has been appointed to the Advisory Committee for Economic & Trade Policy, Ministry of Commerce of the People’s Republic of China from July 2011. His recent research focuses on China’s economic reorganisation and the shift in development strategy as well as the new One Belt One Road Strategy. He is President of the Maritime Silk Road Association (Macau) and writes extensively in newspapers, magazines, and scholarly publications. Louise do Rosário is a Hong Kong‑Chinese writer specialising in the Chinese economy, having written numerous articles since the early 1980s about China’s economic transformation. She has worked as a staff writer for both English and Chinese‑language media organisations, including the Economic Digest (Hong Kong), Commerical Radio (Hong Kong), and the Hong Kong Standard. Between 1983 and 1994, she worked as a staff correspondent for the Far Eastern Economic Review (A Wall Street Journal publication) in Hong Kong, Beijing and Tokyo. Later she was a regular contributor to the Economist Intelligence Unit and The Banker magzine (a Financial Times publication). She now writes for Macao Magazine and is co‑author of the Pearl River Delta Investment Series, published by the Macao Pearl River Delta Research Association.
PROJECT COORDINATOR Gonçalo César de Sá is Director of Macaolink and Information Services, Limited., President of the Macao Pearl River Delta Research Association and Vice‑President of the Maritime Silk Road Association (Macau). César de Sá is also Editor‑in‑Chief of Macao Magazine and Macauhub, a news agency dedicated to relations between China and the Portuguese‑speaking Countries. He has served as Director of Lusa – Portuguese News Agency, in Asia (1986 to 2000 and 2005 to 2009) and in Brazil (2001 to 2005). He is based in Macao and is a specialist on the relations between China and the Portuguese‑speaking countries. He has produced several books and films on the Portuguese presence in Japan during the 16th century. In 1980, he was part of the team that set up Radio Macau and later the Teledifusão de Macau.
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SOURCES
SOURCES • 2 015
economic statistics and the 13 Five‑Year Plans of the nine major Pearl River Delta
cities are from the official websites of the respective city governments
•C hina’s •C BRE
National 13 Five‑Year Plan, www.xinhuanet.com
Research, Greater PRD Infrastructure Outlook
• G uangdong’s
Provincial 13 Five‑Year Plan,
http://news.southcn.com/shouyeyaowen/content/2015‑12/01/content_138069889.htm
•H ong
Kong Economic Journal（香港信報), http://www.hkej.com
•H ong
Kong Economic times (香港經濟日報) http://www.hket.com
•H ong
Kong Trade Development Council, http://www.hktd.com
• I nvestHK, •M acao
www.investhk.gov.hk/
Magazine, www.macaomagazine.net
•M acauhub,
www.macauhub.com.mo
•N ewsgd.com • P an
(南方新聞網), http://www.southcn.com
Pearl River Delta Cooperation Information Network (泛珠三角合作信息網),
http://www.pprd.org.cn/
•Q ikan
(龍源期刊網), http://www.qikan.com.cn
•S outh
Reviews (南風窗), http://www.nfcmag.com
•T he
Greater Pearl River Delta. A report commissioned by invest HK, Hong Kong 7th
edition, http://www.investhk.gov.hk/zh‑hk/files/2014/05/InvestHK_GPRD‑Book_Eng_ Apr2014.pdf
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GLOSSARY
GLOSSARY “CLP”.....................................................China Light and Power Holdings “CNOOC”...............................................China National Offshore Oil Corporation “CRRC”..................................................China Railway Rolling Stock Corporation “ETDZ”...................................................Economic and Technological Development Zone “FDI”......................................................Foreign Direct Investment “GDP” ....................................................Gross Domestic Product “HIDZ”...................................................Huizhou Zhongkai High‑Tech Industrial Development Zone “HKSAR”............................................. Hong Kong Special Administrative Region “MSAR”............................................... Macao Special Administrative Region “Pan‑PRD”.............................................Pan Pearl River Delta “PM2.5”.................................................Particulate Matter, 2.5 micrometers or less in diameter “PRD”.....................................................Pearl River Delta “RMB” or “Renminbi”..........................The lawful currency of China “R & D”..................................................Research and Development “SEZ”.....................................................Special Economic Zone “SHIP” ...................................................Shenzhen Hi‑Tech Industrial Park “SLSTP”.................................................Songshan Lake Science and Technology Industry Park “SME”....................................................Small and Medium Enterprise “SNHI” ..................................................Shenzhen Nanshan Hi‑Tech Incubator
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The Pearl River Delta region includes the nine major cities of Guangdong: Guangzhou, Shenzhen, Foshan, Dongguan, Huizhou, Zhongshan, Jiangmen, Zhuhai and Zhaoqing. The region is known for its pioneering role in China’s economic reform and for its rise to become a leading global manufacturing base.
with support from